Seriously you need a contracts repository…

I really do not think there is any longer an excuse to not have a central repository of contracts in your organisation, yet even though more and more companies are coming to market looking for a contract management solution; I think the majority of companies are yet to put in place an effective repository of contracts, that provides visibility into contracts terms and commitments.

Forget procurement and sourcing for a second. Yes they are critical to putting in place good agreements with the right suppliers; but what about the contracts you already have? It’s time to draw a line in the sand and say ‘right, every new contract that we enter into will go into the contract management system and be managed correctly’.

‘But where do I start?’

Start with a title, and number, and a party. No I don’t mean have a party, or yes, have a party when you finally put a contract management system in place. I mean your supplier or customer who is ‘party’ to the first agreement that you put in your contract management system.

Ok. Yes. An Excel Spreadsheet is better than nothing. But very quickly, the number of contracts and the number of columns for each will become too much. The real issue will be when you try to share the spreadsheet. Which was the latest version?… Yeah… Ummm… okay it’s time to get something purpose built.

Try contracts-NOW for a good starting place. Contracts-NOW is a contracts register that you can attach documents to, and set up some basic alerts for milestones and contract trigger points. And guess what????? It’s free for under 25 contracts, so get started while you assess your real contract management requirements. And it’s cloud… OMG… cool.

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Cloud – time to take another look

Walking into a meeting in Government in Australia and saying the word ‘cloud’, has for the past few years, been like saying ‘bomb’ on a plane. It’s pretty much a conversation killer.

But in 2012, I invite you to take a look around and see all the business applications that are starting to be consumed by government, from the ‘cloud’. “What’s changed?” I hear you ask. Nothing. It’s just that people are starting to get used to the idea, and there is far less ambiguity as to what ‘cloud’ actually is. Oh, and money talks. When you talk about savings of 80%, or ROI in 3 months, people start to listen.

I keep writing ‘cloud’ in inverted commas because we need to define the term. Cloud can be defined as “Providing ICT resources over a network, as a service, in a dynamic and scalable way.” But this definition tends to confuse the matter further, in that, the cloud we’re all really talking about is the public cloud. Nobody cares if you want to setup a private cloud because it’s just throwing more money at your internal ICT infrastructure. Your IT department is happy because they’re involved, and it doesn’t involve hosting your ‘sensitive’ data off-shore; raising privacy and security ‘issues’. More inverted commas.

The cloud we’re all talking about is the public cloud, where ICT vendors find economy of scale in servicing multiple customers from a single platform, lowering entry costs for customers. Consumer applications have been leading the drive to the public cloud; banking, social networking, file sharing, email, etc. But now business applications are almost as prevalent, the poster child of course being CRM and salesforce.com. But look closer and you will see Financial, ERP, file sharing, and line of business apps everywhere, and being adopted en mass by businesses. And Government. I hear you gasp.

The key reason Australian Government has been fearful of adopting cloud applications is the perception that their data will not be safe if it is hosted outside their organisation. And if they can get past that, then they are even more scared of it going outside of Australia. Some are even scared of their data leaving their state because of perceived differences in state law.

Some Government agencies have done their due diligence and are well within their rights to have concerns for certain data being located in certain jurisdictions. But for the most part, a little homework would help them to realize that, if they write their contracts well, and manage the risks, it’s just outsourcing. We’ve been doing it for years, but now it’s called cloud.

And this is exactly what APRA (Australian Prudential Regulation Authority) and AGIMO (Australian Government Information Management Office) say about cloud; assess and manage the risks. Don’t confuse ‘onshore’ with ‘secure’, because data security, privacy, location, and jurisdiction are all very different things.

Many Government agencies are now taking their data to the cloud, and many off-shore because they know the risks and they are managing them accordingly. My earlier definition of cloud looks at five key characteristics of cloud. There is a truer way to look at public cloud, and that is to redefine it altogether as a delivery model; the ‘utility’ model of delivering ICT resources.

Back in the late 1800s the power industry reached a maturity where electricity could be delivered ‘as a service’ to businesses and homes, and power generation was managed centrally. Businesses no longer had to manage their own power generation infrastructure, formerly maintaining boiler rooms and steam turbines and such. Subscribers could take as much power as they wanted, when they wanted it, and they only had to pay for what they used; sound familiar?

The same thing is now happening with ICT. It’s increasingly much more cost effective to take ICT resources on-demand in this way, than to manage your own infrastructure and moving forward it’s what we’ll all be doing, I guarantee it.

So when tackling the question of ‘do we or don’t we?’ Try these tips.

  1.  Realise that within your organization there may be some whose interest is not served by cloud, such as IT professionals maintaining internal servers and infrastructure.
  2. Price may be a deciding factor for you. Compare the cost of cloud versus on-premise and you may be very surprised at how cost effective it can be.
  3. Assess the risks of taking your data off premise, and think. ‘Who is likely to be better at managing data security, someone whose core business is managing data security, or your in-house IT guys?’
  4. Get the facts straight. There is a lot of misinformation about cloud, and a lot of people talking when they should be listening.

So, you can do cloud, and you can host your data offshore. Just make the right, informed decision for your business.

As published in Local Government Manager – March 2012

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Software is no longer a technology buying decision

Software is no longer a technology buying decision.

In an environment where customers are increasingly choosing best-of-breed point solutions, organisations are finding it increasingly time consuming and expensive to have their IT departments assist them in supporting new software solutions.

Their are finding it more cost effective to push to the cloud anyway, so the CIO needs to position ‘himself’ in the (traditional) role of advisor to the business, as businesses try to navigate the increasingly complex web of IT outsourcing and cloud.

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Big Business needs to buckle down and get in the cloud

As SEMs embrace the cloud with enthusiasm, larger businesses must this year assess the risks of cross-jurisdictional cloud offerings and take the leap into the public cloud, and consuming ICT in the pay-as-you-go utility model.

Businesses have for many years being talking about cloud and hedging their bets. Many will this year find themselves uncompetitive if they are unable to effectively make the transition.

Vendors of mail and productivity suites have been starting to gain greater traction as businesses determine what classification of data they can and cannot take to the cloud. There is significant cost benefits to be gained by businesses taking the leap to cloud for software and infrastructure as a service. These include the savings on in-house infrastructure and people costs, and the transition from Capex to Opex on large ICT investments.

Once businesses can effectively classify the different data within their organisations, and assign the data handling and security requirements for each, they will have far greater choice as to the software and service offerings that they can take advantage of. For Australian companies there is a far greater number of vendors offering useable solutions from other jurisdictions, such as interstate and off-shore. Some of these are Australian vendors hosting overseas. Both APRA and AGIMO endorse due-dilligence similar to any outsourcing activity, and to assess and manage the risks in the same way.

Once businesses realise that they can take data off-shore, they will be able to reap the benefits.

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Megaupload cautionary tale to spawn cloud backup services

So, the Megaupload case has left many completely innocent customers, through no fault of their own, without access to their files, which were ‘safely’ held in the cloud.

This highlights issues of data location and sovereignty, that many Australian ‘cloud’ customers and would be customers, have concerns about.

Still however the real issue is not who owns the data, or whose police department can take the servers away, but whether or not you have a local or otherwise accessible backup. Even transition out plans could can not help the customers of a site shut down so suddenly. Even a well constructed contract would provide only legal solace, not practical protection of your data.

My belief is that this will spawn the emergence of specialist cloud back up services, where vendors provide third party backups, in the cloud, of your cloud data. Backups will be provided potentially under different legal jurisdictions, and on different continents, but these backup services will mean that customers can still enjoy all the benefits of the cloud, with a little more piece of mind.

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5 Steps to Cloud Success

Moving about the country speaking about cloud, the key pressures and talking points around the subject become very evident. I’ve been asked to list the 5 steps to cloud success so here goes.

1. Know the enemy

As you embark down the cloud path you will encounter opposition from within your organisation. Your IT department may have a competing agenda, as they may see cloud as ‘doing’ them out of a job. It’s true that the role of your IT department is changing, but they are still very important and have a key role to play in the future of how your organisation consumes it ICT resources. Your decision to go ‘cloud’ is an outsourcing decision, nothing more. The best way to handle objections from IT is to assess the risks and present your IT department with a clear documented strategy of how you will mitigate any risks and involve them in the process. Then they will have now choice but to support you. Perception is your biggest enemy so documenting a clear strategy will soon put any uneducated doubters in their place.

2. Compare costs of in-house versus Cloud

One of the key drivers to Cloud is cost. Software as a Service (SaaS) can drastically reduce the entry cost to large enterprise software platforms. And year on year it may still be significantly cheaper. Think of it like this; Instead of maintaining servers and software just for you, vendors can spread infrastructure and support costs across hundreds or thousands of customers; the economy of scale means costs of consuming ICT are coming down, it’s no longer too good to be true.

3. Assess the Risks

Call me crazy but it is more than likely that large cloud providers are more capable of managing data security and data privacy than your organisation. So you should stop thinking that putting your data in the cloud is unsafe. Their core business is ICT Infrastructure and their whole business model depends on their ability to keep your data safe. Make sure your agreement contains a clear transition out plan where your data comes back to you in a non-proprietary usable format on termination, ensure ISO standards and appropriate security mechanisms are in place, and get to work. If your provider’s data centre is outside of Australia it’s ok too. Classify your data and if it’s not appropriate, keep it in Australia. If you can take it off shore do it. But assess the risks and take action; don’t procrastinate. If privacy is your concern, Singapore is on of the safest places in the world to store data. If data sovereignty is your concern the you must have some pretty sensitive data. Classify it correctly and move on. Again, perception is the killer.

4. Get your facts straight

Cloud is the UTILITY MODEL of delivering ICT resources. Don’t worry about complicated explanations. You can now consume software and ICT resources on-demand. That’s take as much as you want, when you want, and only pay for what you use, like water, electricity, gas… The Utility Model. If you have all your ducks in a row and you know your facts about your vendor and the delivery model before starting the conversation you will have a much easier time of convincing others. Don’t let the explanation be ‘cloudy’.

5. It’s Not A Fad

Cloud is here and here to stay. In about 1890 the guys in the boiler room running the steam turbine electricity generator said electricity utilities would never catch on. They were wrong. Cloud is here to stay so embrace it and use it to your competitive advantage.

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Utility Model the way to go when defining ‘cloud’

Amongst all the hype and rhetoric about cloud, many people are unsure of what cloud actually is, and the cloud message has lost its way.

While a simple way to define cloud is as follows, there is a better way to look at it.

“Providing ICT resources over a network, as a service, in a dynamic and scalable way.”

This definition looks at five key characteristics of cloud. But not meeting one of the characteristics should not deprive a service of its cloud status, or of being a better way to deliver ICT resources, just because of a definition. Indeed a truer way to look at ‘cloud’ is to redefine it altogether as a delivery model; the ‘utility’ model of delivering ICT resources.

Back in the late 1800s the power industry reached a maturity where electricity could be delivered ‘as a service’ to businesses and homes, and power generation was managed centrally. Businesses no longer had to manage their own power generation infrastructure, formerly maintaining boiler rooms and steam turbines and such. Subscribers could take as much power as they wanted, when they wanted it, and they only had to pay for what they used; sound familiar?

The same thing is now happening with ICT. It’s now much more
cost effective to take ICT resources on-demand in this way, than to manage your own infrastructure.

Adopting the utility model definition may deprive some types of private cloud, for instance, of being ‘cloud’, if the service is not
delivered ‘on-tap’ so to speak, or as a service. But private cloud has huge advantages for some organisations, and will derive its own identity.

So let’s talk about the utility model moving forwards, and
cloud is just part of that; private, public, PaaS, SaaS, etc.

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Open Windows on Azure

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Legal Counsel need to act

We built Open Windows 17 years ago around what we identified as the ‘Contract Management Problem’.

That, ‘Organisations expend a great deal of time and money negotiating and executing contracts, but when they finally sign them, the lock them away in filing cabinets, and don’t bring them out until something goes wrong’.

I think many in-house legal counsel feel that their job is to negotiate agreements to include appropriate legal protection for the level of expenditure or risk to be contracted. What some possibly think is not their responsibility, is how that risk is managed post execution.

It’s fine to have all that legal protection should something go wrong, but then we all know prevention is better than the cure. Especially when it comes to litigation.

Managing milestones, deliverables and commercially critical trigger points in contracts ensures pre-emptive action may be taken, before something goes wrong. With the level of sophistication and the volume of agreements being managed by most larger businesses, systems are needed to manage contracts, and can take over the administration component of management, leaving the people to manage the relationships.

In addition to managing the risk, who’s ensuring that hard faught volume breaks and rebates are being monitored. Many procurement organisations negotiate terrific deals, yet have no systems in place to manage transactions to contract. Staff continue to buy from uncontracted suppliers, and even contracted suppliers, but off contract. So transactional contract management is as important as commitment management to the Ts&Cs.

I think Legal Counsel need to take some responsibility for how agreements are managed post-execution, and look at methods for enforcing their negotiated value, across the organisation.

Can you believe it’s four months until Christmas?…

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Are you ready for Cloud?

Vendors are currently investing R&D now almost exclusively in cloud delivery of their software and service applications and platforms, and for the most part at the expense of traditional on-premise deployment models.

Are you ready for cloud?

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