May the source be with you

2 Nov 2006

Philip McLaughlan, managing director of brand promotions firm PPAG, recently came to the crossroads that many small Irish companies are finding themselves at these days. “We rely heavily on IT and trade online with the Far East. If our systems fall down it means we could miss a shipping deadline. If we miss a shipping deadline by a day it means it could be another week before merchandise gets here.

“However, we are a small company with 14 people who at one level or another are involved in sales or other revenue-generating activities and we don’t think the size of our company justifies employing a 15th person as an IT manager,” says McLaughlan.

McLaughlan’s predicament is typical of many small Irish companies who are reliant on IT to keep the wheels of their business in motion but don’t see the merit of having to employ an in-house IT manager, adding substantially to the payroll.

The idea of outsourcing IT to a provider that would maintain a firm’s network remotely and allow the business to focus its resources on core activities is not new but one that small firms until recently believed was an option open only to larger businesses.

However, with more companies on broadband and better technologies available to remotely manage networks, it is expected that the 17,000 small and medium-sized enterprises (SMEs) in Ireland present an IT outsourcing market worth potentially €105m a year.

Until recently there were few options open to small businesses. Usually the task of keeping the company online or fixing printer problems fell to someone in the company with a dubious knowledge of technology. Otherwise it was a case of waiting hours or days for a service provider to send over a technician.

PPAG, a firm specialising in brand promotions, was established in 1991 and focuses on providing corporate gifts, sales promotion and loyalty schemes. In recent months the company struck a deal with IT provider Qualcom Systems to use QualCom’s virtual IT manager service, which gives firms an alternative to an in-house IT professional

McLaughlan explains: “Our IT system was a typical Irish small business installation — a mishmash of different computers and brands with no clear strategy in mind. If we needed another computer we just went and bought one. In the past that was okay because there was always someone who new something about fixing a problem. However, today IT is much more complicated and the demands on IT from business at all levels is equally as heavy.

“From PPAG’s point of view our IT needs to be always on. We have a worldwide network of suppliers and even while we sleep business is being done and updates are there on our desks when we arrive in the morning. IT underpins our business model.

“Because our 14 people are in revenue-generating roles, employing a 15th person just to keep our systems online in case anything went wrong was expensive — it was overkill. Also, IT managers are expensive, difficult to find and not every small company has the skills to interview and judge the right guy for the job. Plus, if we opted for a part-time person what would we do if the systems failed when they weren’t around?”

The company examined its options and opted for Qualcom’s virtual IT manager service. “We just come in in the morning and everything works,” McLaughlan says. “The systems are working while we sleep and we know that we are compliant with data protection legislation and security. They use a combination of remote diagnostics and Microsoft Small Business Server. I was working away one day and I got a call from a Qualcom engineer who told me that my server array was about to fail and he needed to verify a serial number on a disk in the server. They knew it was about to fail before I did.”

“Definitely outsourcing our IT function has enabled PPAG to increase productivity and because we have removed the cost of employing an IT manager we have increased competitiveness.”

Ken Breen of Qualcom says there is increasing interest amongst firms with between 10 and 35 employees across many areas of business in IT outsourcing. “What we’ve found is that companies with less than 50 users cannot afford even one IT person. Companies just want to get on with their core business despite the fact that they need technology to conduct business.

“Up until recently the most important pieces of technology for a business were the payroll and accounts package for invoicing. If a system failed and it took half a day to fix it didn’t hold things up much. However, today businesses are embracing modern technologies like the internet and customer relationship management. The sophistication we are seeing in big businesses is the same in smaller companies and they all have the same issues of security, virus problems and employee email and internet access control.

“However, if any one of these services fail companies are finding they can’t function at all. The number one benefit of IT outsourcing for smaller businesses is cost because the alternative is hiring an IT manager who has to take holidays. A 24×7 service never sleeps and never takes holidays,” says Breen.

Alfred Bethel is sales manager with small IT firm Motherboard, which provides outsourced IT services to over 100 Irish SMEs. “All of these companies’ servers would be connected via remote access to our server using Microsoft Windows Small Business Server. If anything goes wrong we can either pre-empt that problem or respond immediately and resolve the issue within an hour. It beats sending a guy across the city in a van.”

He says that more and more businesses are switching onto IT outsourcing. “Small companies with upwards of three to five employees are finding that technology is boosting their reach and ability to compete with other businesses in other geographies. The technologies that enable remote IT support have been around for a number of years now and have proven themselves.”

However, Bethel believes that while more and more businesses are outsourcing their IT function, it is still a trickle rather than a flood. “There’s a lot more education to be done and people need to think beyond the file-and-print attitude to computing.

“There’s more they can do for their business as a result of IT. I think in time more and more businesses will opt to outsource their IT management. Microsoft, in particular, is investing a lot in promoting these values,” Bethel concludes.

WHERE ON THE WEB: Online outsourcing resources
Tips for smarter business practices such as cutting costs and e-business
Useful articles on highs and lows of outsourcing
Dublin-based outsourced IT service provider
Nationwide IT and data products and services provider.

CASE STUDY: Chamber-made solution

With 10 employees and more than 400 member companies, South Dublin Chamber of Commerce relies heavily on customer relationship management technology as well as databases and the internet to ensure smooth and efficient running.

As well as lobbying on various business issues such as transport infrastructure and waste management, four members of the chamber’s staff are also involved in a property company called Ronson that generates additional revenue.

Peter Byrne, the chief executive of South Dublin Chamber of Commerce, says that the decision to outsource its IT management was vital. “It just wasn’t economically viable for us to have an in-house IT person. We put out a tender and did a comparative analysis of the various providers in the market.”

The chamber signed a contract with Dublin-based Motherboard that included a server system based upon Windows Small Business Server 2003 as well as client PCs, office productivity applications and workgroup laser printers.

Also included within the scope of the contract is an ongoing service level agreement that ensures South Dublin Chamber of Commerce will have on-demand access to Motherboard’s technical team, both onsite and online via Motherboard’s remote support centre.

“Motherboard has not only kept our systems running, it also ensured that we are compliant with legal software. As a chamber it is important that we are seen to engage in good IT practice and we don’t want to have licences for software we don’t own. We chose Motherboard because it was also a small company and could empathise with our needs.”

Byrne says the chamber has a policy of putting the tender out ever two years and he said that small companies should treat it like shopping for car insurance. Staying with the motor car analogy, he said: “Businesses need to be very clear about what they need. Some IT providers would sell you a Rolls Royce when in reality you want something affordable and reliable like a Toyota.”

Alan Bethel of Motherboard adds: “We won the contract against competition from bigger competitors. The chamber now has a very stable and reliable infrastructure in place and all the applications staff require are there for them. They can access email and desktops remotely whenever the need arises and there’s a secure and reliable back-up in place.”

By John Kennedy

Pictured — Peter Byrne, chief executive, South Dublin Chamber of Commerce