Software Licensing & Master Service Agreements : Chicago Software Licensing Lawyer & Attorney : Sam Conforti Law Firm : Master Service Agreements, Negotiations, Outsourcing : Cook County, Illinois

Software vendors can increase their revenues during this prolonged recession.  How do these vendors make lemonade out of this lemon of a global economy?  They must look to their installed customer base.  Mike Smerklo, President & CEO of ServiceSource, has written an OpEd piece for SandHill entitled Delivering Predictable Revenue Streams.  ServiceSource is in the Service Performance Management business which aims to increase their clients’ service revenues by increasing the number of customers on maintenance and increasing the dollars spent on maintenance.

In economic downturns, such as we are now experiencing, customers defer new product purchases.  Although this is not a positive for software sales, it does increase the value that can be placed on enhanced maintenance and support services.  Software companies must continue to invest for the next generation of products, but enhanced maintenance today can drive revenue and provide the reliability that customers need.

Smerklo cites a Gartner study that the potential market for maintenance and support is over $180 billion annually and that only $150 billion is spent on maintenance every year.  It is easy to see that there is another $30 billion in potential maintenance and support not being tapped.  He increases our lexicon from the more familiar term “market share” to a new term he labels “service share”.  This is the total maintenance revenues available from the installed base.  And he lays out for us a complete 4 part service management strategy as follows:

1.     Technology Platform:  The vendor’s CRM must measure transaction data on the maintenance side down to the granular level.

2.     Business intelligence:  The analytical capabilities of the vendor must be able to show what the customers are buying and why some are saying no.

3.     Customer contact:  Must have the ability to help the customer extract the most out of their solutions.  This will enhance the relationship and could pay dividends down the road on renewals and purchases of new product.

4.     Benchmark against the competition:  Need to know your specific service metrics in comparison to the industry overall.

The Service Performance Management alternatives are as follows:

1.     Do Nothing:  All focus on product revenue and market share can come back to bite you especially on renewals.

2.     Build your own service management platform:  This could be costly.

3.     Partner with a Service Management Performance provider:  They have the expertise and the capabilities to manage on a global basis.

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In order for SMB’s to compete with their larger counter-parts, they need to increase their operational efficiency.  CISCO interviewed Laurie McCabe, vice president of small and medium-sized business (SMB) insights and solutions for research firm AMI-Partners, and came up with some suggestions to enhance SMB’s ability to compete using network technology.  Here is what they’ve come up with:

1.     Give employees access to information:  SMB’s need to react quickly.  Slow and unsecured networks erode competitive advantage.

2.     Mobile employees need access anytime and anywhere: Virtual Private Networks (“VPN’s”) and wireless networks allow mobile employees to stay connected to the network.

3.     Develop business processes with partners:  Operational efficiency is enhanced when you can meet your partner’s requirements.

4.     Collaborate, Collaborate, And Collaborate:  With partners, employees, suppliers, and customers.  Use integrated voice, video, data, wireless, and other technologies.

5.     Your phone system should go where you go:  Missed calls mean missed opportunities.  Solutions exist making one phone call ring multiple devices.

6.     Modernize customer communication:  Link your IP communication system to a Customer Relationship Management (“CRM”) solution.  Before your employee answers the phone a pop-up appears on their screen with customer information including recent orders and returns.

7.     Travel time kills operational efficiency:  Use video conferencing whenever possible to reduce travel to offsite meetings and training sessions.

8.     Outsource IT tasks to a Managed Service Provider:  Employee’s time is better spent on supporting the enterprise’s core competencies rather than on managing network security.

9.     Employee retention is key:  Frustrated employees affect customer’s confidence in the enterprise.  Burned out employees leave and time & money is spent rehiring.  A reliable network alleviates this frustration.

10.  Develop a long-term technology plan:  Eliminate disruptions from replacements of massive obsolete hardware by devising a mapping of solutions to objectives.

To read the full details see Ten Tips for Increasing Operational Efficiency.

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Due to the current economic conditions, IT departments are coming under increasing pressure to do more with less.  However, over the last few years upper level management has become leery of divesting themselves of the servers and network to a service provider.  In prior postings to this Blog I have provided reasons why outsourcing can benefit the enterprise, 10 Reasons to Outsource, and also a comprehensive checklist to consider prior to making the decision, Checklist Before Outsourcing Your IT.  In an effort to continually update this topic as events evolve, this posting is another in this series and concentrates on the concerns one might have regarding the Service Provider.  To get the full detail underlying the following points to consider when evaluating which Service Provider is best for your enterprise read Outsourcing Your Infrastructure: Ten Points to Consider When Making the Move.  Here is a brief summary of those ten points:

·         Uptime:  Greater reliance on the internet makes “On” the only option.  The global marketplace makes this a necessity.  The options could be straight hosting, managed service, or SaaS.

·         Redundancy and Business Continuity:    loss of customer call center could result in lost orders.

·         Data Restoration:  eDiscovery Laws require a significant and competent back-up plan.

·         Response Time and Site Performance: providers have high-performance servers and high-speed access, but do they have only one location.

·         Scalability to meet growth: Can the Service Provider add capacity quickly to meet the rapid increase in demand, in other words, does the Service Provider have the financial capital available to rapidly add more servers.

·         Customer Support:  This is the “value-add” dimension that differentiates one Service Provider from the other.

·         Security:  Must be able to adhere to the Data Privacy laws such as Sarbanes-Oxley, and Gramm-Leach-Bliley.

·         Cost Reduction and One-Stop Billing:  Abandon the ala carte approach to IT infrastructure.  Bundled services are discounted.

·         Optimized IT resources i.e. dedicated servers:  Allows IT staff to redirect their efforts to delivering their own services.  Plus services on demand priced on usage is better offered from a service provider’s business model.

·         Financial improvements:  Eliminates the need for cash oulay for hardware and turn the cost into an operational expense as the enterprise pays for a service.

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Mobile Device Management:  Strategies for Smart Phones and PDAs

It is estimated that by the year 2011 there will be over 82 million mobile devices in the workforce.  IT departments will be tasked with providing controls over the deployment of these devices.  A good mobile device management strategy is essential to ensure that risks and costs are in control.  The payback will be increased productivity.  Lisa Phifer, vice president of Core Competence Inc., a consulting firm specializing in network security and management technology, has put together a checklist of such strategies in her whitepaper Mobile Management Checklist: 6 Essential Steps that will guide you through the entire lifecycle of such devices, from activation to retirement.

Previously cell phones and PDA’s were not considered deserving of IT management.  Their capabilities were limited and employees did not utilize them sufficiently to call for a Mobile Device Management (“MDM”) policy.  With the new and more powerful devices, IT is being called upon to develop and manage the smartphones of the workforce.  Phifer has provided a checklist for such a strategy.  Admittedly not all the items in this checklist are needed for every IT department and some items are slight variations of desktop management, but other items are unique to the MDM strategy.  The following is a summary of that checklist.

·         Mobile Asset Inventory: includes

·         classifications

·         maintenance

·         physical tracking

·         database integration.

·         Mobile Device Provisioning:

·         which platforms must you support

·         how will you register devices

·         how do you install the MDM on the device

·         how to configure and override factory installed defaults

·         Mobile Software Distribution:

·         which applications to bundle

·         do you push or pull software to the device

·         Mobile Security Management:

·         user authentication

·         password enforcement

·         device wipe – ability to delete data or hard reset device

·         Mobile Data Protection:  consideration must be given to

·         encryption

·         backup & restore

·         data tracking (i.e. and audit trail)

·         Monitoring and Help Desk Support:  among other things this includes

·         self-help

·         diagnostics

·         remote control

Phifer’s whitepaper contains a further detailed discussion of this checklist and developing and managing a MDM strategy.  It is well worth the time to read her discussion and suggestions.  She concludes her paper with the following:

“Gartner predicts that more than 70% of enterprises will implement converged management and security policies for corporate-owned and non-corporate mobile devices by 2012. Mobile devices are already proliferating at a rapid pace, both in terms of platform and ownership. The sooner you develop a mobile device management strategy to deal with this daunting but inevitable scenario, the better life will be for both your employees and your IT staff.”

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