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It Takes a Community to Raise a Customer

Brent Leary — 2009-11-19T14:16:24-05:00

A recent survey commissioned by e-mail marketing provider Campaigner found the top challenge facing small business owners today is customer acquisition and retention -- by a landslide. The 2009 State of Small Business Online Marketing Survey questioned over 250 North American small business owners with 20 employees or less. And customer acquisition/retention was the top business challenge of 50 percent of those surveyed. Growing revenue was a distant second with 15 percent, followed by improving cash flow and maintaining profitability -- at 9 percent and 8 percent respectively.

The numbers in this survey seems to be on point with other studies I’ve seen over the past year. While revenue growth, cash flow, and profitability are extremely important to any business, they are all driven by the most important asset businesses can have -- good customers. And many small businesses do not have enough of those good customers to fuel the other three top challenges they’re faced with.

Small businesses are looking for ways to build better, stronger relationships with customers. And many need to bring on new customers before they can even worry about retaining them. But with the rise of the social customer, this mean it’s critical to connect with them in a way that builds trust.

A recent EdelmanTrust survey found that trust is key to building and extending business relationships. But the most trusted people customers and prospects turn to for product information are not company employees or management -- in fact, these are among the least likely people tend they’ll turn to at first. Instead, people tend to trust academic researchers, industry experts, and people like them. They are also relying more and more on their social networks, industry bloggers, and opinion sites to determine what vendors to engage. And these interactions with trusted entities are creating organic communities that can help companies create good customers, and business longevity. Below are some ways for companies to communitize their efforts to engage socially-empowered customers.

Participate

Before we can really expect communities to form around our companies, we need to add value to the communities that have already formed around our customers and prospects. This means finding out what social networks they hang out on, what subjects interest them, which bloggers they listen to, and anything else that will help us understand what makes them tick. This calls for a lot of listening. Listening is a form of participating that gets overlooked by many, but is the most important step in engagement. Without listening and understanding what’s important to your target, your attempts to add value to the communities important to them will not be as successful, which in turn will sabotage your trust-building efforts.

Facilitate

Listening and participating in trusted communities can show customers and prospects that you are sincerely interested in them -- beyond the transaction. Showing a genuine interest in what’s important to these current or potential customers can help you facilitate activities that will help them find solutions to what’s currently on their minds. You may be able to help connect them to trusted resources -- and it's okay if these resources are not necessarily directly related to your business.

A great example of this is BatchBlue, a small business that provides an online customer relationship management (CRM) solution aimed at the small business market. They started facilitating a weekly Twitter chat called the SBBUZZ, which discusses topics of importance to startups and entrepreneurs. They bring in experts in different areas to interact with the people who participate in these two-hour weekly sessions. And they post the transcripts of these chats up on a blog for people who weren’t able to attend to access the content. They do not promote their product or service. Instead, they facilitate the opportunity for small businesses to share information, connect with experts, and to engage each other. So what started at the beginning of the year with no followers on Twitter, now has over 13,000 followers -- with hundreds of active participants each week. And this community of small businesses continues to sing the praises of BatchBlue for understanding their need for this type of interaction. It has helped the company become a trusted, valued company to small businesses looking for CRM services.

If customer acquisition and retention is important to you, than using online channels to build trust is key to the survival of your business. Customers are looking for much more than a transaction from vendors today. The customer experience has to touch them in ways that may not have mattered before, but are crucial in the Social Era we're now in. It’s too easy to switch vendors because your competitor is just a click away. So take the time to thoroughly understand what is important to the customers. And it’s growing more apparent that interacting with each other, influential experts, and other trusted entities are an important component to the customer experience.

So improving the community experience should go a long way towards improving the customer experience, which should help with the biggest challenge facing small businesses. Community can raise customers, and your business.

Brent Leary is a small-business technology analyst, adviser, and award-winning blogger. He is the co-author of Barack 2.0: Social Media Lessons for Small Business. His blog can be found at http://brentleary.com, or follow him on Twitter at http://twitter.com/brentleary.

Top 10 Free Apps and Services for Business

Marc Saltzman — 2009-09-28T14:12:36-05:00

Times are tough, but you can save your company some cash by taking advantage of many free applications and services to help you remain lean and competitive.

This includes many downloadable programs for your BlackBerry, iPhone, or Android smartphone as well as tools for PC productivity, such as online back-up options, voice over Internet protocol (VoIP) software, and no-cost office suites.

Free apps are sought-after downloads today in business. It's not just because it makes sense to those watching their bottom line, but the apps are getting a lot more robust instead of simply covering the basics, says Scott Steinberg, publisher of Digital Trends. "You'd be surprise what you can find today when it comes to free applications -- and there's plenty of free apps to choose from for your smartphone, PC, or a cloud-computing solution that bridges the two," adds Steinberg.

Steinberg says he's most excited about the explosion in downloadable apps for smartphones. "The apps transform phones into notebook replacements, audio recorders, GPS navigation devices, note-taking devices, and even gaming getaways for those in need of an entertainment fix while traveling for business."

Speaking of travel, Chris Silva, an analyst at the Cambridge, Mass.-based Forrester, the technology research company, says many of these free productivity tools have an inherent benefit compared to traditional desktop software: "On-the-go businesspersons want to be able to access their content wherever and whenever, and on any device -- and while Microsoft recently unveiled a 'cloud' component to [Microsoft] Office, we're finding people are turning to Google's established and free Gmail for e-mail, file storage, document sharing, and so on."

Caveat emptor

There's little dispute that cost-cutting measures are critical -- especially given the current state of the economy -- but there are a few things about free software that businesses should be aware of.

Silva reminds businesses that these free apps are still not as full-featured as paid versions. "Productivity suites might not have the 500-plus menus and tools built into Microsoft Office, for example, but most people don't venture outside of 'create, format, print and share' anyway," he says. "Many companies, especially small to mid-sized businesses, are finding these free alternatives to be good enough for their needs."

Silva also warns of two other possible downsides to free apps. "It's no secret there are occasional Gmail outages, which means you can't access your e-mail, or Skype congestion that can affect call quality, along with other issues associated with Internet-based solutions," he says. "Plus, there are always increased security risks in allowing your employees to use any kind of software they want. You'll need to take steps to educate employees about risks, about some company information that shouldn't be shared with Gmail or IM, and mitigate these with policies."

Best bets for free apps

If you're looking for completely free apps for your smartphone or PC, consider the following recommendations:

Skype -- Available for PCs and select smartphones (iPhone and Windows Mobile), Skype lets you make free phone calls to any other Skype user on the Internet via VoIP technology. PC users can also chat using video, swap files, or pay a few cents a minute for "Skype Out" calls to landlines and cell phones.
Gmail -- Google's free Web-based e-mail solution reliably keeps you in touch with others, regardless of the platform you're using it on. Benefits include loads of storage, little spam, contact and calendar management, and support for Google Talk between multiple devices.
OpenOffice.org -- Sun Microsystems's free Microsoft Office alternative offers a suite of productivity tools, including word processing, spreadsheets, presentations, databases, and graphics. It supports multiple operating systems and has a portable version that runs off a USB key.
Documents To Go -- With a free version included on newer BlackBerry devices, this clever app suite allows for viewing and editing of Word, Excel, and PowerPoint documents. It's usually bundled with PDF To Go, as well, supporting Adobe's popular Portable Document Format.
Zoho -- Free for individuals, Zoho's range of productivity and collaboration apps include Zoho Mail, Zoho Chat, Zoho CRM, Zoho Writer, Zoho Discussions, Zoho Sheet, Zoho Meeting, Zoho Show, Zoho Creator, Zoho Docs, Zoho Invoice, Zoho Notebook, Zoho Projects, Zoho Wiki, Zoho Reports, and others.
Windows Live SkyDrive -- Microsoft is offering up to 25GB of free online storage. Only a Windows ID is required (such as a Hotmail e-mail address) and this password-protected virtual drive can be accessed for virtually any online computer in the world. Some folders can be set up for sharing, while other are for your eyes only.
Remote Desktop Lite -- Use your iPhone or iPod touch to securely access a Windows XP Professional computer, anywhere on the planet. This software provides full access to your PC -- via Wi-Fi or EDGE -- as if you were in front of the machine you're accessing. At the time of writing this, Remote Desktop Lite is the no. 1 free business app at Apple's App Store.
Call Time Tracker by momentum -- As the name suggests, Redwood Technologies' free app for Blackberry helps business professionals account for their time in order to bill hours and recover expenses. Ideal for lawyers, consultants, salespeople, realtors and IT professionals, this app pops up at the end of calls and you can easily mark it as billable time.
Nice Office -- BlackBerry users can manage their e-mail, calendar, contacts, and tasks from this one free suite of tools. Nice Office securely also grants access to forms and documents, lets you record sales activity while on the go and automatically logs device activity, and provides a detailed report on mobile interactions with your contacts, including calls, messages, and appointments.
Google Maps -- While it doesn't provide audio-based turn-by-turn commands, Google Maps is a completely free and powerful tool for your smartphone that can help you find nearby establishments (such as restaurants, gas stations, or hotels), show overhead street views (even with satellite imagery), and give you accurate directions to a destination. It works via GPS or even cellular technology (though the latter isn't as accurate).

Managing IT Costs during a Recession

Mike Gorsage — 2009-07-14T16:19:06-05:00

Since last Fall, I have been offering readers tips on how to help your business weather the economic storm. Many of you have taken drastic cost-cutting measures and made enduring strategic changes. And as IT is a common cost-cutting target, strategies like IT outsourcing have already been implemented. So what more can you do to not only control costs, but also prepare for the eventual recovery?

Despite recent reports of growing economic optimism, real recovery may take much longer than expected, as companies continue to experience declining or flat revenues. Now is the time for constant vigilance -- to revisit the basics, particularly new strategies for managing IT costs.

With a comprehensive, no-holds barred approach to IT asset utilization, your organization can boost savings, improve efficiency, and maximize return on every dollar. By putting both your investments and assumptions on the table and performing a cost-triage, you can take a leaner approach to IT that improves your liquidity today and helps you prepare for the growth that will ultimately arrive.

Innovate through oversight

The key player in any cost rest process is the CFO. But to achieve more rapid cost reductions and re-growth of profits, it may be necessary for your CFO to step out of the traditional role as guardian of the financial “silo.” To guide your organization through what seems to be this second phase of the recession, your CFO should focus on realizing tangible benefits from IT as part of a balanced oversight program.

Careful technology cost triage and oversight can yield many opportunities for CFOs to innovate. They can find new ways to manage risk and set standards for corporate performance. They may also explore incentive based strategies that utilize mindsets and corporate culture rather than traditional top-down directives. Other ideas include implementing strategies to integrate controls and metrics into operations and deploying a flexible mix of resources (staff, advisors, consultants, contractors) to enable the company to more nimbly adapt to change.

Align costs with value

What does this all mean for IT? It means a more positive oversight role for CFOs, moving beyond the traditional “do more with less” mandate of a stereotypical “Dr. No” CFO. It’s a much more meaningful role, one that results in linking all costs to value delivered -- an approach that can be a template for creating value in key areas outside of IT.

How? Primarily by working with the CIO to verify that IT delivers the basics, i.e. reliable systems that produce accurate, valuable data. CFOs must help business leaders to better manage demand for IT services. They should also insist on good IT management practices, especially deploying a flexible mix of staff, rationalizing and simplifying processes and transferring work to lower cost resources and manage demand for IT services.

When it comes to spending, CFOs must ensure that IT does not build capability from scratch. Instead, it should leverage the company’s distinctive operational strengths and managerial innovation. The benefits of IT must become balanced between rationalizing existing processes and innovating new models and processes. In general, IT must be required to create value for the company as a whole (instead of divvying up spending by function).

Provide top-line support

Your CFOs and other C-level leaders should also support the CIO, particularly through involvement in IT investment decisions and holding business unit leaders accountable for operational changes they commit to as part of the business case for IT investment. Leaders can help identify and communicate the economies of scale that IT brings to the business.

With careful execution of these steps and expansion of the CFO’s role, you can quickly generate results, such as tightened spending discipline and a clear illustration of the services being delivered. Given the volatility of today’s environment, strategies like these can help you create more variable costs and properly align those costs with the downward revenue trend.

With all businesses come tough times and tough decisions. Although you have already cut IT costs, it doesn’t mean you can’t do more. The crisis is not yet over, so it’s essential to remain in survival mode. With new technologies, approaches and products still being proven, there are ample opportunities to streamline and innovate. Don’t hesitate to buck traditional CFO roles and challenge all assumptions. Most importantly, keep your goal in sight: a lean, cost effective IT structure that prepares you for growth when the recovery finally arrives.

Mike Gorsage is a Partner and Technology Practice Leader for Tatum LLC. Tatum is the nation’s largest executive services firm, providing financial and technology leadership nationwide.

Real-Time Marketing Tech Boosts Business

Kim Boatman — 2009-06-25T16:31:54-05:00

It’s a Tuesday night, and business is excruciatingly slow at the local pizzeria. So, the owner utilizes a mobile marketing service to send a quick text to the restaurant’s customer base, offering a generous discount to diners who visit within the next two hours.

In uncertain economic times, it’s particularly important to know your marketing is both timely and reaching the right customer base. Increasingly, real-time marketing technologies are helping small to mid-sized businesses nimbly adapt to the ebb and flow of consumer demand. These technologies also offer the ability to pinpoint marketing, providing more return on investment.

“Real-time marketing has emerged as a way for small and medium-sized companies to more easily and efficiently keep up with larger competitors,’’ says Manu Mathew, CEO of marketing business intelligence firm Visual IQ. “All marketers, especially those at companies with smaller budgets and greater accountability, are looking to make each dollar work harder in today’s economy.”

For the most part, these real-time technologies focus on mobile marketing, social media, and combinations of the two to reach customers. Here’s a look at several ways you can utilize real-time marketing tech:

Reach your regular customers

Companies such as Zingr and Jittergram are designed to help you reach regular clientele with offers through mobile messaging. Flexibility and immediacy are key, says Margaret Donnelly, vice president of business development and marketing for Jittergram. The company has focused its efforts in its home base of New Hampshire but plans to expand.

“With traditional couponing and promotions, it is kind of up to the consumer when they want to come in,’’ Donnelly says. “Jittergram allows the merchant to generate incremental business when they need it most.”

Zingr allows a business to narrow its focus, says spokesman Sarah LaLiberte. “As a business, you are able to target the appropriate customers with the appropriate message at the appropriate time,’’ she says. For instance, a hair salon that notices an open day on its books can define a search by customers who live close by, who’ve utilized the salon in the last year and who haven’t visited in the last five weeks. If 75 people fit the profile, says LaLiberte, the business could use Zingr to send a 10 percent coupon to 25 people. If the response isn’t sufficient, a coupon worth 20 percent could be sent to the next 25. If the salon still needs to fill a couple of slots, a coupon worth 25 percent off would go to the remaining 25 people.

“The difference between e-mail and this new mobile marketing is the level of customization and strict anti-spam opt-in rules, and the bonus to businesses is immediacy,’’ says LaLiberte.

While traditional couponing offers a 1 percent response rate, Jittergram’s Donnelly puts response rate to these text messaging offers at 7 to 14 percent redemption. Start-up cost is reasonable -- Jittergram customers can send as many as 500 messages a month for $75. And the Web interfaces for both companies are easy to negotiate.

The key to these services is establishing a strong subscriber base. Businesses usually offer incentives, rewards and contests to enroll their customers. It’s also important not to inundate clientele with messages. Jittergram suggests no more than one or two a week and allows businesses to segment their subscribers to reach targeted audiences, says Donnelly.

Track potential customers by interest

RunE2E, a customer relations management firm in Alpharetta, Ga., uses LeadLander, a real-time tool that shows which companies are visiting RunE2E’s website and what content they’re viewing. “As a B2B company, we find it invaluable,’’ says Alex Gramling of RunE2E. “If we see a company looking at our content, we can immediately follow up with a phone call and try to learn more about their interest. It’s a great way to identify new leads and even see if competitors or current prospects have been on your site looking for info.”

TwitterHawk uses the immediacy of Twitter to find potential customers by searching Tweets by location and topic. Using search terms and locations you determine, TwitterHawk then sends automated responses you’ve created. For instance, if you run a coffee shop in a certain town. You could search for Tweets using “coffee,” sent by people within five miles of your town. You’re also able to confirm matches before a response is sent and to even personalize a response. The company charges 5 cents a response. Controls help keep the annoyance factor down so that you’re not sending multiple responses to one person.

Attract customers by proximity

Proximity Blue is launching Bluetooth marketing zones in New York/NewJersey-area malls where Bluetooth-wearing customers are instructed to download messages and offers from businesses. “A small to mid-sized business can now have their ad sent out at these high traffic locations and drive traffic to their own location,’’ says Alex Teplish of Proximity Blue. Floor decals, banners and signage let consumers know about the downloads, and the messages are limited to one every half hour. Once people leave the zone, they no longer receive the prompt. The plan is to expand to malls throughout the country.

MobiQpon is among companies enabling businesses to reach local consumers through mobile messaging. You create a coupon online that is sent to consumers who are able to categorize offers by location and type. Yowza, an iPhones app, operates in a similar manner. And Krillion, a real-time product search engine, lets customers know exactly where a product is in stock in their area. So, if you’re selling a certain brand-name grill and you use Krillion, your business’s information will pop up when a consumer visits Krillion to find a source for the grill.

Increasingly, businesses have the opportunity to market more effectively, using new technologies. The challenge is to react swiftly to information you receive through these new marketing technologies, says Sergio Alvarez, founder and chief operating officer of online advertising company Ai Media Group. “If used correctly, real-time marketing can help gain new customers at a time of a need and not a want -- think basement water proofers during a rainstorm,’’ says Alvarez. By presenting your exposure at the appropriate time, you maximize return on investment, Alvarez says.

Is a CIO a Luxury or a Necessity?

Mike Gorsage — 2009-06-04T14:04:55-05:00

How many things can you name in your business or personal life that are not driven in some way by technology? These days, not many. Everything from your car, your healthcare, entertainment and communication -- they’re all technology-based.

In virtually every sector today, dependence on technology is growing. Just look at the recent flurry of national technology positions created by the Obama administration: a Cyber Czar, a National CIO, a Chief Innovation Officer, to name a few. All signs point to an elevation of the strategic value of IT and the need to clearly define the roles of your technology leaders.

CIOs as strategic partners

Does this trend mean you must have a CIO? It all depends on the value your company places on IT. Consider your website, for example. Very likely, it’s the front door to your business, and it’s a tool that didn’t exist only a few years ago. What value does it represent for your organization today? Chances are, it has changed the way you do business. Technology like this eliminates the boundaries of time and distance in interacting with clients and customers -- a significant contribution, to say the least.

For many businesses, technology is a strategic part of the delivery mechanism for client service, the development and delivery of products or meeting other requirements such as regulatory and compliance issues. When this is the case, having a CIO is not a luxury -- it is a necessity.

Today’s CIOs manage much more than systems and data. They must be as business-focused as they are technology-focused. In fact, the most effective CIOs bridge the gap between the two disciplines. Businesses of all sizes can benefit from their leadership, particularly when going through a growth phase or a transition, such as a move from legacy to enterprise systems. Even relatively small firms regularly need to address strategic issues and make sure current initiatives properly align technology to support the business. A CIO can help streamline your systems, avoid costly mistakes and integrate new technology into your business.

Technology: cost or asset?

If your IT leaders do not view technology as a business asset, then you lose sight of the value proposition that technology provides. Technology for technology’s sake does very little for your organization. You start getting highly fragmented from your technology, and your operations become more complex. By refocusing on strategic planning and integrating it into your business, you are better positioned for future growth and opportunities.

A common mistake firms often make is entrusting high-level technology decisions to a “default” CIO, possibly a lower level IT manager or director, who lacks the experience needed to effectively manage IT resources. These individuals tend to focus on interfaces, hardware and networks, rather than how these systems integrate with your overall strategy. This lack of a truly cohesive strategy can prevent an organization from recognizing the benefits, and in some cases new revenue streams, that a solid technology strategy can bring.

The outsourcing alternative

If you have determined that IT is not a strategic part of your business, you probably don’t need a CIO. You could consider outsourcing the majority of technology -- both your infrastructure and applications. But even in doing so, you cannot ignore the value of strategic thinking. You must still assign a senior level business executive to think about the technology implications of business initiatives that your company takes on, particularly as your company grows or needs to consolidate, re-tool, or reset costs.

Outsourcing may help you become more stable. A large commercial real estate firm recently hired an outside firm to investigate IT practices, revealing that a recent investment in server upgrades wasn’t being put to full use, weakening the flawed, outdated infrastructure. Simple help desk requests took weeks or months to rectify, causing technology deficiencies that harmed sales and prevented managers from growing the firm’s business units. The outsourced firm objectively recommended a new IT staff and a fully operational infrastructure. Within a month, the firm lowered technology costs and cut help desk responses from weeks to just hours or minutes. Once technology was aligned with the overall business strategy of the firm, the business stabilized, frustrations faded, and focus returned to clients.

When handled properly, outsourcing can help you achieve greater economies of scale within your budgets. In fact, if your budget cannot handle a full-time executive, you might even consider buying a portion of time from a consultant with multiple clients, giving you the high-level guidance you need without the heavy price tag.

There is also a downside to outsourcing. It may be difficult to decipher whether a company is advising you on what’s best for your business or what will give them the highest margins, causing a natural conflict of interest. Conducting thorough research on reputation in your industry and prior achievements, along with a healthy dose of skepticism, can help you identify a possible conflict.

Whether or not you outsource or bring on a CIO, consider how your IT efforts are positioning you for the future. Some businesses thrive without a fully functional CIO, while others seek outside guidance to develop systems that support business strategy. Whatever your choice may be, don’t relegate your infrastructure to another line item on the balance sheet. Take a look at your technology platform and make sure you have the resources in place to gain competitive advantage and prepare for what’s to come.

Mike Gorsage is a Partner and Technology Practice Leader for Tatum LLC. Tatum is the nation’s largest executive services firm, providing financial and technology leadership nationwide.

IT Cost Reset

Mike Gorsage — 2009-05-14T16:54:55-05:00

In today’s economy, no entity is exempt from cost cutting initiatives, particularly corporate IT departments. This comes as no surprise to CIOs, who are aware of the costly nature of IT. But before your organization begins slashing budgets, remember: your IT department supports virtually every aspect of your business. Reactive, misguided cost-cutting decisions can harm your ability to emerge stronger following tough economic times, rendering you ill-prepared when the upturn comes. With careful planning, you can successfully optimize IT expenses while preserving liquidity and performance today.

What’s the solution? Creative and carefully executed plans for an IT Cost Reset. Keep in mind that IT operating expenses and capital expenses go hand in hand, making them two of the most critical components of protecting business liquidity. In a world of tighter money, that means planning projects effectively and looking for ways to optimize and reduce IT costs. It also means never losing sight of the future -- creating an environment that fosters growth and innovation.

The following steps can help you protect liquidity and identify areas to optimize and reduce costs and capital consumption.

Step 1 -- Know where you’re going

An important part of developing a plan is having an idea of what the outcome should be. One way to accomplish this is to produce an outline of the deliverable before starting the project, so the end goal is always in sight. This outline should include a detailed analysis of the various cost cutting measures along with the ramifications of each.

Step 2 -- Conduct an honest assessment

Can a company be truly honest in assessing its own spending habits? It’s a difficult task for anyone -- personal biases inevitably enter the equation, along with defense of colleagues and particular applications and pet projects. This is where an independent assessment can be invaluable.

While an internal group, such as an internal audit function or a performance team, could be used to conduct such an assessment, they must have no vested interest in the technology base or the people base. There would also have to be a declaration that there would be no resizing of the workforce. An independent assessment could eliminate these hurdles. Because they are uninvolved, a third party could clearly and quickly determine where you are and where you are spending money.

Step 3 -- Virtualize, consolidate and rationalize

As you begin assessing your IT costs, first review your portfolio of technology, including hardware and software. Look at how they could be rationalized and simplified into a more cohesive set of applications to facilitate integration and support of new processes.

On the hardware side, it’s likely you have servers dedicated to particular applications. Review how many servers you have, what their capacities are, and how they are being used. Many servers today can support multiple applications, so if you find yours are underutilized, consider consolidating servers and eliminating excess hardware that is not necessary to support business needs or protect against disasters. This not only reduces your hardware footprint but also reduces costly energy consumption.

The same approach applies to your network and your software. By consolidating and reducing your total number of network servers and routers, you reduce the size of your network without sacrificing efficiency or performance. In terms of software, which extends into every functional area of your business, rationalize your applications portfolio by reviewing variables such as the number of users and the number and type of reports they generate.

Very often, people forget the costs of maintaining applications. For example, let’s say you identify an application used only to generate reports several times per year. Compare that usage with the cost of renewing the software license, which can be steep, and the cost of maintenance, including updating IT skills to keep the application running and integrated to others. With careful rationalization, you can identify other applications in your current portfolio that could perform the same role.

Once you have reviewed these technological areas, the next logical area to analyze is your staff. If your rationalization process results in scaled down servers and applications, you may not require as many staff to maintain IT operations.

Step 4 -- Keep cleaning house

While tough economic conditions or impending crises are often the impetus for companies to launch cost cutting initiatives, they really shouldn’t be. An IT cost reset should be conducted on a regular basis as a part of your regular IT strategy refresh. Think of it like cleaning out your closets -- if you haven’t worn it in years, you can probably throw it away.

With detailed planning and thoughtful analysis of every major area of IT, your organization can protect its liquidity, reduce operating expenses and minimize your capital consumption. It’s a reliable formula that can help you through the downturn and position you to seize the opportunities that are sure to come.

Mike Gorsage is the National Technology Practice Leader for Tatum LLC. Tatum is the nation’s largest executive services firm, providing financial and technology leadership to businesses of any size.

Lessons from Web 2.0: Fast Track Innovation Process

Vijay Chittoor — 2009-05-01T15:42:33-05:00

Over the last few years, Web 2.0 has evolved to become not only a design paradigm, but also a development methodology that has become synonymous with innovation. Web 2.0 companies are able to innovate rapidly for four simple reasons:

Low cost of innovation. You don’t need a bucketful of cash to prototype a Web 2.0 product or launch a Web 2.0 company. Costs of computing and storage have fallen dramatically, and services like cloud computing virtually eliminate the need for heavy IT infrastructure, reducing fixed costs. Case in point: Y-Combinator, a seed fund that invests an average of just $15,000 per venture, has helped many young companies get their start. Y-Combinator success stories include Reddit (acquired by Conde Nast) and Zenter (acquired by Google).
Rapid bite-sized improvements instead of massive launches. The software that powers the Web services can be updated constantly, because it’s delivered over the Web. As a result, Web 2.0 companies often upgrade their services every day or every week, launching new features and fixing bugs.
Ease of “measuring” user interactions with the service. Web services have the advantage that user interaction with the site or the service can be measured in a very precise manner. It’s easy to record the time spent by an average user on the site, the number of page views they saw, the trail of clicks and pages that helped them complete their task, and a lot of other such data. Because everything can be measured, Web companies have developed a philosophy of testing and measuring a lot more and guessing a lot less. Before any feature is launched to the entire audience of a site, it’s often tested on a small portion of the user base.
An open innovation model. Web 2.0 companies have realized that some of their most innovative ideas might not come from within the company. Using Web-service application programming interfaces (APIs), they have exposed some of their most precious data to outside developers who can build innovative applications. Real-time search, one of the most used applications on Twitter, was developed by a company called Summize, using Twitter’s API. Twitter later acquired Summize.

Taken together, all these methods are geared towards a new model of innovation -- one that emphasizes rapid experimentation and serendipitous discovery. Since every idea is cheap and quick to try out with real users, and the results are easily measurable, Web 2.0 companies get to road test several ideas without spending excessive amounts of time trying to prioritize between them. Similarly, by allowing outside developers to use the company’s data to create applications without any restrictions, Web 2.0 companies are in effect launching hundreds of experiments simultaneously.

This throws the traditional model of product development and innovation on its head. In the old days, companies performed exhaustive (and costly!) analysis to determine which one or two ideas would be most likely to succeed, and then invested accordingly. The Web 2.0 model makes it possible to experiment with a lot of ideas, without investing a lot of upfront cash or forcing assumptions about which idea will deliver the biggest upside. This new model is great for a world in which consumer preferences are difficult to predict and change rapidly.

While your business might not have the same natural advantages as a Web 2.0 company, with a little bit of redesign of your processes, you could use elements of the same philosophy to fast-track your innovation. Here are some tips to get you started:

Lower your cost of new product development. Be on the lookout for opportunities to reduce your costs of new product development. Using technology for knowledge management and outsourcing to low cost countries are among some of the ideas that innovative companies use. For example, in the electronics industry, Original Design Manufacturers (ODM) companies based in low cost countries like China have emerged as choice partners for prototyping and launching new designs.
Create experiments that lead to continuous bite-sized improvements.If any aspect of your offering is a service, you can keep innovating by adding small features or by improving the workflow. In order to do that, you need to build a test-bed for trying out lots of experimental ideas. A few years ago, Stefan Thomke, a professor at Harvard Business School, published an insightful study detailing how Bank of America turned its branches into “Service Development Laboratories.” For instance, Thomke talks about an experiment designed to solve the problem that users perceived their wait times to be longer than the actual time. In order to remove the perception, the experiment involved testing user perception when televisions were installed over teller booths and comparing that with a standard branch without televisions. By measuring the improvement in customer satisfaction ratings with the television, the team was able to develop a case for wider rollout to some of the bigger branches of BofA. This is a great example of an experimental setup that leads to constant improvement in the quality of service.
Measure everything and create feedback loops. You should aim to find opportunities for measuring user interaction with your product or service directly at the point of interaction, without relying on “marketing surveys.” Harrah’s is a great example of a company that invested in business intelligence solutions around its loyalty program, and made all of its marketing efforts highly data driven. Whenever a customer conducts a transaction using their Harrah’s card, the information is transmitted to a database, and used in a variety of ways to target the customer. The success of marketing campaigns is also measured using this data, and the campaigns are optimized accordingly. Soon after the program was launched a few years ago, its success made Harrah’s the most profitable company in its sector.
Open up the innovation process to others and plug in with the ecosystem. In his book Wikinomics, Don Tapscott talks about how Goldcorp Inc., a struggling Toronto-based gold mine, opened up its sensitive geological data to the public to help the company get accurate estimates of the location of gold in its mines in Red Lake, Ontario. Within weeks, solutions poured in from all kinds of unexpected quarters, and identified more than 110 targets, half of them not previously identified by the company, with 80 percent of the new targets yielding substantial amounts of gold. In another example, Proctor & Gamble has developed a program called “Connect and Develop” with a goal of having 50 percent of its new products come from outside the company’s labs. The program also opens up access to P&G’s innovation assets. On the other hand, if you can’t find good ways of exposing your own data, you could instead think of using the data and APIs exposed by others -- for example, Pure Digital, the manufacturers of the Flip Video Cameras, used YouTube’s APIs to make it easy to upload videos directly into YouTube, and in the process out-innovated the competition.

It’s clear through all these examples that the new model of innovation is for everyone, and not just Web 2.0 companies. Find applications for these ideas in your business, and use them to change the world for the better.

Vijay Chittoor is the director of product panagement at Kosmix, an exploration engine that offers a 360 degree view of any topic on the Web. A former McKinsey consultant, Vijay is a graduate of Harvard Business School and the Indian Institute of Technology, Bombay. He shares his thoughts on technology at his blog..

Using Cloud Computing to Simplify IT and Unlock Resources

Mike Gorsage — 2009-04-01T14:47:56-05:00

What’s the hottest IT trend today? Many IT professionals will tell you it’s cloud computing: utilizing a third party service to perform computing needs over the internet. “The cloud” is a great place to do business -- if you know how to do it right. That means understanding the risks involved and implementing due diligence processes to protect your valuable data.

Weighing the risks and rewards

While the definition of cloud computing varies from source to source, its meaning becomes clear when you consider one common IT goal: increasing capacity with minimal investment. Cloud computing relies on sharing large groups of servers and connections rather than using smaller local servers to handle applications. More and more companies are investing in this technology because it can dramatically reduce costs and improve efficiency, reliability, and throughput.

For example, a large company going through acquisitions could benefit from moving their e-mail infrastructure and directory to the cloud. A move like this removes a major function from their IT shop’s plate and shifts it to a third party. In doing so, they can reallocate staff and allow their core applications team to remain laser-focused on the applications that support their fundamental business requirements.

But any time you invite an outside provider into your business, you’re also inviting risk. Although most providers offer a degree of disaster recovery, imagine the worst happening: you’ve handed your vital information to a company that is here today, but gone tomorrow. You suddenly find yourself high and dry, with years of irreplaceable institutional memory gone forever.

That is why it is critical to be clear about your security profiles and the type of business you’re in. Where will your data be stored? How does the provider protect against corruption or loss of data? What systems are in place in case of an outage, or if the provider’s business should fail? All are important questions to ask when considering a move to the cloud.

Heading for the clouds

The migration to cloud computing must be well thought out, with a structured work plan, a project management office and a team to make it happen. The first step is deciding if the time is right for you. There is no one “right” time for a company to close its server rooms and adopt cloud computing -- it’s a decision only your organization can make.

Above all else, consider your current business requirements. Do you need to control the space on your servers? Would you be better off giving some control to someone else? As you decide which, if any, activities to send to the cloud, make sure your business objectives are clearly defined and your activities align with them.

The next step is choosing the right provider. Carefully review references and levels of client satisfaction. You may even find a provider who specializes in your industry and understands your specific issues, such as regulatory compliance. Make sure they are capable of handling your infrastructure, set up clear service agreements and ensure that they keep their applications up to date. If not, you will quickly fall behind -- an undesirable position to be in, particularly if you decide to bring the function back in house.

Maintaining control

Just because you hand off some functions, you’re not necessarily at the provider’s mercy. There are steps your IT department should follow to maintain some level of physical control.

First, hold monthly or weekly status meetings to review any changes or upgrades to infrastructure or security platforms. The key to your success is constant communication. Let the provider know of any changes or additions to your staff. Keep in mind, you are sharing resources with multiple users, and without proper capacity planning, your provider may be unable to handle unexpected surges in usage.

Make sure the company provides a set of dashboards detailing key metrics, such as server utilization capacity, data storage, rate of increase, cost per week of computing power, number of outages, and comparisons to service level agreements. Constantly reviewing these variables can help you spot trends and potential problems.

No matter when or if you migrate to cloud computing, one thing is clear: it is changing the way companies do business. Every new technology brings risk, but with constant due diligence and communication, you can confidently put cloud computing to the test in your organization.

Mike Gorsage is a Partner and Technology Practice Leader for Tatum LLC. Tatum is the nation’s largest executive services firm, providing financial and technology leadership nationwide.

Online Accounting: Numbers in the Cloud

Andrea Peiro — 2009-04-01T14:44:10-05:00

Financial management is the delicate balancing act that transforms marketing success, operational results, and managerial savvy into a viable, durable business.

In order for a small business to be efficient and effective in managing its finances, computerized accounting and digital financial services tools must become part of its daily kit. While such tools are traditionally desktop-based software programs, a new breed of online financial management applications has emerged in the last few years, taking advantage of the growing confidence that businesses are developing in the Web as a safe business environment. Now that entrepreneurs are indeed becoming comfortable with the “software in the cloud” model and the inherent benefits it offers, they are in growing numbers starting to look beyond e-mail or office productivity to more sophisticated and sensitive applications like financials.

Web-based financial management applications are not new -- think online brokerage and banking. But fully featured online packages are just now fully blooming, not only rivaling in functionality their desktop-based counterparts, but also extending their usefulness through value-added online services such as bill payments, electronic checks issuance, digital invoicing, or customer credit verification. Moreover their collaborative features, such as multi-user access and accountant view make it a natural fit for the “on the go” lifestyle of most modern small business managers.

Accounting online

The heavyweight of small business accounting, Intuit, has launched an online alternative to its Quickbooks software that can be finally considered a valid option. While its previous attempts were not very successful, the current version of Quickbooks Online, priced from free to $34.95/month, is a quality product that, while not as powerful as the desktop version, does a pretty good job.

Peachtree, a longtime small business favorite, also has debuted a well featured online version starting at $150/year and representing a very viable alternative.

Notable new online-only accounting packages for small businesses include Clarity Accounting and Less Accounting which is nicely integrated via mashups with Web favorites such as Basecamp, Shopify, and PayPal. Almost ready to re-launch is NetBooks, a product with a bit of a troubled history, but with a very interesting and complete set of features and now in final Beta release. Accounts can now be opened and used for free.

A truly superb product, designed for mature small businesses is Intacct. Created from the ground up as a Web-based application, it provides very sophisticated accounting features and it natively integrates with a number of other Web-based software offerings such as Salesforce.com.

For even more mature and large organizations, requiring not just accounting but a comprehensive online suite of business management applications, NetSuite is the leader in the space.

Online bill payment

If you think for a moment about what it is truly involved in paying your business bills using the traditional checkbook and snail mail, it is not difficult to imagine that there must be a better way to do it. Well, there is, and it is called “online bill payment.” While banks have offered similar services for quite a while as part of their online banking offerings, there are independent services that go well beyond the electronic check, and make the process of receiving, screening, tracking, and paying bills extremely efficient.

Both Paytrust -- owned by Intuit -- and CheckFree can receive bills on your behalf, scan them, make them available to you in digital format via a secure Web interface, and allow you to pay them with a click of the mouse, issuing an electronic check or an EFT order. This approach can be adopted for all vendors and all invoices, and cuts the average time needed to process a bill by more than 50 percent -- in my experience -- and greatly simplifies the record keeping aspect, eliminating paperwork.

Online invoicing

When it comes to get paid, or at least to efficiently issue and send invoices, there are a plethora of Web services available. The most notable is Freshbooks, a pioneer of the Web 2.0 era, which allows for efficient time tracking, billing, quoting, and more.

Intuit has its own offering tightly integrated with Quickbooks online called Billing Manager, while Zoho Invoices comes as part of the Zoho online productivity suite.

A roster of other minor offerings fill various professional niches and differentiate on price and unique features, including: Free Agent, Simply Invoices, Invoice Place and Billing Orchard.

The Web is opening the doors to scores of new software developers every day, reducing the costs to develop new products and services, creating competitive opportunities for better, less expensive products. Online financial software is just now entering the realm of full acceptance among small businesses. Expect an explosion of new, more tailored applications from large players such as Google and Microsoft as well as upstart companies. New products will surface on the horizon in the next couple of years offering true integration with banking, invoicing, billing, and all the other financial services that small businesses use every day, together with more robust ways to analyze performance, giving way to a new generation of well managed and more robust small enterprises.

Andrea Peiro is the Small Business Market Expert at the Palo Alto Research Center (PARC). Founder of the Small Business Technology Magazine, a recognized authority, author, analyst and speaker on high-tech marketing and use of information technology in small and mid-sized businesses, he has been frequently interviewed and featured in such media outlets as The New York Times, The Wall Street Journal, and Inc. You can reach him at us.andreap@gmail.com.

Tech Talk: Circuit Maker Automates Accounting Processes

Elizabeth Wasserman — 2009-03-22T16:42:29-05:00

PLX Technology, of Sunnyvale, Calif., designs and makes integrated circuits for customers in the computer server, storage, communications, industrial, and consumer electronics industries. Arthur Whipple, chief financial officer of PLX, tells IncTechnology.com that upgrading to new financial software helps the publically-traded company ensure the proper internal controls that allow him to produce high quality financial statements.

Elizabeth Wasserman: Tell us about your business.

Arthur Whipple: We're a high tech Silicon Valley company that builds integrated circuits, which are in an area of connectivity that goes into enterprise class electronics. Our major customers include Cisco, IBM, Huawei, Dell, and various customers that make big servers and big backbone systems. We make devices that stitch together components such as the microprocessor and memory to get them to talk to each other. We're the glue in these systems.

Wasserman: Why did you need new financial software?

Whipple: We decided to go with BlackLine Systems. I've installed this twice now. First, at my previous company, Silicon Storage Technology. The issue here was initially about account reconciliations. In order to have reliable financial statements, you have to look at each account in the financial system and make sure each agrees with reality. If you have a petty cash box, you need to count it and make sure it's there. You have to make sure somebody actually counted and made sure the receipts are there. If you have a bank statement, the bank doesn't know about the checks you've written that haven’t been cashed yet. You have to do a reconciliation from outside to the general ledger. You're looking for an external confirmation for an internal number.

Wasserman: Why is this important? Is it just because you're a public company?

Whipple: What you are trying to do is make sure that the financial statements you put out there are correct. A lot of judgment goes into financial statements. You want to make sure you don't have mistakes in your financial statements. The reputational risk with poor financial statements can be a real problem. You can lose credibility with your shareholders and that creates huge opportunities for attorneys and other people to come in and make claims when people make mistakes in financial statements.

Wasserman: What was behind the timing of the change?

Whipple: People have been doing account reconciliations forever. But up until 20 years ago they were done with pencil and paper. They made lists of numbers and added them up and reconciled them to bank statements. Over the last 20 years, people have started to use spreadsheet technology, of which Excel is the most popular. But the programming is done by amateurs. In most financial systems, the code is done by professionals, and locked up, so that you can't change the code without someone checking it thoroughly. With Excel, an accountant can decide to make a formula change and that can throw off all your numbers. Academics have done tests and found that up to 80 percent of the Excel spreadsheets out there have some error in them. We were able to get rid of all our Excel based reconciliations and move to a program that was hard-coded by people who know what they're doing and locked down so people can't make errors. BlackLine automates the entire process, virtually eliminating manual errors.

The other side of this is that we are also tracking tasks. We're making sure that the things that need to get done actually get done. It's a glorified to-do list. There are dozens or hundreds of things that have to happen and aren't reflected as a balance in the financial statement. You have to check with the transfer agent to make sure equity is properly stated. You have to make sure you know the number of checks that are outstanding. The analyses in 10Ks or 10Qs need to be done reliably, and you need to have a history of what you did. In this case, if I write a memo to file regarding a fixed asset impairment, that impairment letter or memo can be stored for people who need access to it and it doesn't get lost as you have with paper documents. Once we have uploaded the file, it's protected from loss.

Wasserman: What have the results been?

Whipple: The results have been excellent. There are a couple of things you don't know for many years. We haven't had any issues at all in terms of account reconciliations not being done. I have a dashboard I can look at and I know that all the reconciliations and tasks have been completed and, if not, I know who to go to. When we get to filing SEC documents, everything that needs to be done has been done before I sign my certification that the financial statements have been properly done. CFOs and CEOs are now personally on the hook for the accuracy of those statements under Sarbanes Oxley. I am now confident that all the things required to be done have actually been done in these financial statements.