Good Advice For The Hosted Services Buyer

June 3, 2013 Dan Burger

Hosted services, managed service providers, cloud computing . . . some choose not to think about those things at all, while others try to figure out if there is a good business reason to get involved in some way, shape or form.

Last week I spent some time talking with Jim Kandrac, founder and president of United Computer Group (UCG), which is an IBM business partner and IBM i server reseller. Kandrac also pays attention to the IT services business because his company offers backup and recovery as a service to IBM midrange customers with a product called Vault400. Not only does he sell a service and receive feedback from his customers, but he is also the buyer of services. From those experiences, he has a pretty good handle on what makes a good service provider plus how and why purchasing decisions get made.

His observations and advice are worth sharing, not because he is an IT savant or that he has the answer to every mystery of IT life, but because you are better off having heard this than not. UCG fits the description of a small to midsize business and its customers fit into that category as well. So these tips are better suited for 80 to 90 percent of the IBM i installed base, rather than the top 10 to 20 percent. Some of it you’ve probably heard before. Maybe it was applied to a different situation, and maybe you’ll apply this advice to a completely different situation. But I’m pretty sure most people will get something out of it and it won’t require much of your time.

It begins with a warning that many companies have taken some liberties by describing their solutions as cloud-based. There’s so much talk about the cloud that pretty much every company wants to be associated with it. If you are in the cloud, you’re cool. Your product gets a lift and if you buy a cloud product the cool factor might rub off. Kandrac’s advice is a word of caution. Do your homework on companies that are selling clouds and do it well. This is an evaluation process for business value. It’s not “American Idol.” Look for clients that can do multiple things for you and do them well. Even if you don’t need multiple services now, consider the future.

Part of the homework assignment is visiting the company headquarters and data center, researching the company history, discovering how long the company has been in business, how many customers it has, and whether you can contact customers for their input.

One of the topics to discuss with the vendor, and the customers that a vendor will allow you to contact, is the frequency of vendor updates. If you are talking about SaaS, the vendor should update the application at one location for all the clients. There should also be some training involved so updates don’t lead to confusion and frustration. If it’s not in the contract, don’t assume it will happen or if it does that it will not be an additional charge.

One size fits all is not the kind of language found in the marketing materials for any IT vendor I can think of, but that doesn’t mean products and services are created with that in mind. In the managed services business, the capability to customize should always be available. Customizing an application, for instance, should include the number of fields a user can choose to track. Customers can choose to slice and dice data, even when 80 to 90 percent of the application is a good fit out of the box. They can also vary the types of reports and the frequency of reports they receive. Again, part of the homework involves determining whether a vendor has a customer relationship history that fosters cooperation on requests for changes that improve customer satisfaction.

Do you get the feeling that the vendor can back up its emphasis on service or does it sound more like the priority is selling software subscriptions with extra costs for all but the most basic services.

As IT professionals with IBM i experience, there is a ton of business knowledge stored up your brains. IT has pretty much been the keeper of all the business technology. You’ve been the safe keeper of the corporate jewels and sensitive information. But there are indicators that this is changing, Kandrac believes, and so be aware that departments other than IT are negotiating service contracts that may not consider the safeguards that would be high priorities for IT. You are probably aware of this if it has already happened, but for some it may just be getting under way.

If you have a strong working relationship between IT and the company’s business units, that’s an important alliance. If there’s a riff there, it’s in your best interest to repair it. Partnerships with business and finance departments can help keep IT decision making in IT or at least ensure that IT has input into projects that are being run from departments such as marketing and HR.

“IT needs to participate or perish,” Kandrac warns. “The IT staff needs to stay current and relevant.”

The IT budget is or will be affected when other departments take control of IT requisitions. Loss of budget means loss of respect and diminished influence. Some reporting indicates this is a predictable trend in the future. Most people in IT would say it’s a worrisome trend.