Living in the Clouds: SaaS 101

Last week I had the privilege of participating in a SaaS round-table for Proformative, a Silicon Valley Corporate Finance think tank.  We had a great discussion on SaaS and corporate IT governance.  I presented the following SaaS 101 presentation. 

- Aric Bandy

Vendor Management Improves Business Operations

Two years ago we stepped in as our client’s IT department and committed to providing end user support.  At the time, our client had 101 locations and around 360 employees all over the Midwest.  We mapped out the vendor responsibilities working directly with each vendor.  Using this map we implemented a triage system between our client, their vendors, and us.  We enabled our client’s employees, whether working in the store or in corporate, to simply contact when problems emerge.  For example, if our client had a problem with NetSuite, an ERP/CRM cloud application, he/she would call and send a ticket to us.  We would open a ticket with NetSuite support.  This triage system allows us to figure out exactly what the problem is within a short period of time and open the ticket with the right entity because we know all the interrelationships between the vendors and the infrastructure.  The main advantage of our Managed Services offering is more holistic view of what is happening with IT operations, thereby allowing problems solved in a timely manner.  Another benefit is that by having us work with IT departments of our client’s vendors, problems can be solved quicker allowing the IT team to focus on revenue generating strategic initiatives.

One example of how our services improve our client’s business is by managing their Point of Sale (POS) system.  Considering that this particular client is a retailer, it is of essential to be able to process sales transactions timely and accurately.  At the time we started working with our client, their POS system was around ten years old, and had outdated architecture.  We realized that the databases on each location were growing too large and failing.  Typically what would have happened in the past is that their IT staff would just keep fixing the problems in a reactive way, a short-term solution that does not address the root cause of the problems.  During times when transaction would fail, credit card transactions had to be written on a piece of paper and processed manually.  Once the transaction system recovered, the stores would call in to process the transaction, sometimes much later after the transaction had actually occurred.  This problem was compounded by the fact that 75 percent of the stores were having frequent outages.  Their POS was off once, twice, and sometimes even three times a month for up to a day, and sometimes even more than once a day.  When our team stepped in, we continued to perform the same patches and fixes, but we also started looking into a more long-term solution because these failures were not acceptable for the success of our clients business.  We sat down and looked at some low cost simple solutions that we could implement to help solve these problems. Within three weeks, we had solved nearly all of the transaction problems by revamping their data warehousing process.  There is still an occasional issue here and there which is to be expected in a complex environment, but outages decreased from 75 percent of stores once to three times a month to maybe one to two stores a quarter. It has drastically improved their operations and their ability to conduct business.

Bringing Strategy to Life: Aligning IT with Business Goals

Client Overview and Business Challenges

 

Our client reached out to us to help lay out the risks that existed across their core line of business applications infrastructure.  Initially we did an overall infrastructure assessment and evaluated their IT operations.  Our findings returned a pretty low score due to numerous challenges our client was facing such as aging equipment, reactive maintenance of technology systems, and a limited IT budget.  In addition, one of the challenges our client was facing was its culture where a sense of technology ownership was impeding change.  Overall, our client had to put a lot of effort in order to keep everything running.  Our goal was to implement systems that would allow operations and employees as a whole to work more efficiently through simplifying IT operations.

Agosto’s Solution

Our team created and facilitated an IT Steering Committee where we discussed our client’s risks.  We formed executive leadership team that had to understand the process and that had success criteria and results mapped out in advance so that we could understand what expectations are.  This allowed us to create a IT Strategy Roadmap which mapped out all of areas of risk and determined over a period of time what would have to be done in order to mature the environment.  This commitee also addressed our client’s needs as the evolved and how we would systematically prioritize and execute on projects, with the goal of  maturing the environment in a cost effective way.  Software cost-cutting suggestions that our Strategic Services team recommended reduced the total IT budget from 0.7 percent of revenue in 2007 to 0.3 percent in 2009.  Not only we cut the costs of our client, but we helped develop and implement a plan to leverage SaaS on many fronts and in this way overcame multiple challenges they were facing.  Some of the end results are updating ten year old IT infrastructure to current technologies, implementing Google Apps that replaced outdated e-mail and servers, replacing old Peachtree accounting software and $180,000-a-year CRM software with Netsuite, and setting up Web-based payroll system from ADP.  We did last evaluation of our client’s business about eight months ago and it showed that everything that has been an issue is now updated, changed, and rebuilt so their risks level is substantially reduced.

At the moment, IT Steering Committee meets quarterly focusing more on maintenance during the economic slowdown.  Our team is constantly looking at platforms to support growth for our client, and how to provide much more strategic and forward looking foundations.  In this rough economy our client reached the point where their IT is stable, and they can spend their time and money focusing on operations that generate their business.  

Moving from a Legacy Disconnect to Netsuite and the Cloud

Our client faced the problem of currently not having a customer support system and their Peachtree Accounting Software interconnected and talking to each other.  A solution to this problem was to leverage SaaS so access to this data would be easy from anywhere.  As a result, our client found Netsuite, an CRM/ERP application in the cloud.  Netsuite reached out to us for our implementation expertise, this is how we connected with this client. Once we engaged with the customer, we realized the importance of taking time to understand our customer’s business needs and processes first.  We interviewed their management team to understand the ways they serve their customers.  This enabled us to design a implementation strategy for improving our client’s business.

Our team first brought in a CFO for hire that helped architect accounting system and create the chart of accounts.  During the fact finding process we also realized the importance of revenue recognition. Therefore, we implemented Netsuite Module that allowed for this accounting functionality.  Our team set up and trained our client on how to use the Netsuite.  The net result was a hosted ERP/CRM application in the cloud, which overcame the challenge of not having customer and financial programs connected. Robust features enabled managing customers more effectively and displaying customer related information, including past orders and recent payments.  This exceptional functionality has given our client’s employees the ability to work faster and smarter to serve their customers better.  For example, if our client is providing customer support, their team can take a look at financials of their customer at the same time. 

Netsuite also improved payroll processing.  One of the challenges we encountered was that employees had their own way of doing expense reports that was very traditional and set in the company culture.  Employees are often resistant to change, thus the transition from the old to new system might be a challenge.  What we learned from our experience is that in order to bridge the gap between the old business processes and the actual implementation of new platform, it that it is not necessary to change the ways things are done; we just need to make sure that existing strategies work within the new platform.  By taking this approach we improved our client’s payroll processing time, and overcame the resistance of change of our client’s employees.

"Top 10 Trends in IT for 2009" - Tom Kelly quoted in Baseline Magazine

"Tom Kelly, CFO and CIO at Second Wind Exercise, a $100 million Eden Prairie, Minn., athletic equipment manufacturer, points out that SaaS providers frequently offer better security and uptime than organizations can achieve internally. “This is particularly true in the small and midsize markets,” he says. Second Wind has moved heavily onto a SaaS platform, including using NetSuite for ERP, Adaptive Planning for budgeting and forecasting, and Google Apps for e-mail and word processing."

Read the full article: baseline-magazine-top-10-trends-in-it-for-2009

Executive Luncheon: CFO's & Technology Best Practices. Netsuite and 2nd Wind Fitness.

On October 29th 2008, Agosto held it's first in a series of executive luncheons. The subject of this event was CFO's and Technology Best Practices.  Tom Kelly of 2nd Wind Exercise Equipment presented NetSuite and how he transformed 2nd Wind's operations through the use of key business applications delivered through SaaS.  Gary Pokorn from NetSuite also joined us to demonstrate and answer questions about the NetSuite platform.

If you missed the presentation, please contact Agosto for more information or watch the video below from the luncheon. Thank you - Agosto.

CFO's & Technology Best Practices from Irfan Khan on Vimeo.

Here is the slide presentation that Tom Kelly ran through. It's hard to see the Tom's slides in the video so click along using the presentation below.

Agosto / 2nd Wind Fitness implement Netsuite

View more documents from durranii.

The next Executive Luncheon in our series will have a featured speaker from Google. Tom Mills, Head of Midmarket Sales will be presenting Google and the Enterprise: How is Google changing the way businesses use email, collaboration, and office applications?. There is limited availability for this event so sign up soon. Oh and yes lunch is included, come for the lunch stay for the education.

Register here for this event: Register

More detail about this event: Executive Luncheon - Google and the Enterprise