Can you reduce business risk by doing something your peers regard as risky? Florim USA, with 250 employees, learned the answer when it decided to rethink its IT strategy. Point solutions from IBM, Novell, NEC, and Citrix had increased the complexity, cost, and risk of virtually every IT function. To reverse that trend, Florim USA used a strategy that small companies often consider high risk and high cost: it standardized on one technology platform and deployed major solutions on that platform to cover its most mission-critical functions. The company chose Microsoft technology, because of its potential to help roll back costs and simplify IT management. The strategy worked. Florim USA reduced IT costs by U.S.$3.7 million over four years, boosted IT productivity by 1,400 percent, and reengineered business processes to be faster, cheaper, and more effective. It adds up to a lot less risk.Situation
Conventional wisdom says that small companies should think twice, and then think again, before aggressively adopting technology in the way that larger corporations do. First adopters may find themselves with products that don’t work as advertised—if they work at all. The lean IT staffs of most small companies need less technology to cope with, not more. The costs of major technology adoptions—for hardware, software, consultants, training, maintenance, and support—can be far beyond the benefits that these companies will ever see, given their limited scale. And so on.
It’s a good thing that Florim USA took that conventional wisdom about as seriously as it would a car full of circus clowns.
Just a few years ago, the technology infrastructure at Florim USA—a maker of residential and commercial ceramic tiles designed by its Italian parent company, Florim Ceramiche Spa—looked much like the technology infrastructures at other companies with about 250 employees. The only consistent factor was a lack of consistency. An IBM AS/400 hosted an enterprise resource planning (ERP) system. Email ran on Novell GroupWise. File servers ran on various editions of the Windows Server operating system. The phones—with an infrastructure of their own—ran on NEC. In the words of Charlie Seay, Systems Engineer at Florim USA, “The infrastructure was various flavors of chaos.”
||Standardizing on Microsoft was the key to our success. We used the Microsoft tools and efficiencies to master the challenges that the business gave us—I think better than any of us had anticipated.
Head of Information Technology, Florim USA
When Florim USA first adopted what it considered best-of-breed point solutions for each need as it arose, the diverse infrastructure had made sense. But it turned out that the whole was less than the sum of its parts. Although the technologies did what they were supposed to do, they didn’t do what Florim USA increasingly wanted them to do: work well together.
Each of the company’s systems needed a specially trained technician to support it. That helped to drive up the size of the IT staff to 10 and made it a challenge for Sajal Nath, Head of Information Technology at Florim USA, to reassign staff to cover systems other than the ones for which they had been trained. The risks inherent in a diverse environment spread to all aspects of IT management, including setting up servers, maintaining them, and running support systems such as the help desk.
The diverse environment made it challenging for Florim USA to use its systems in an interoperable fashion—for example, to use Citrix GoToMeeting web conferencing accounts together with the NEC phone system or GroupWise email. Tracking and maintaining licenses was yet another challenge. With all this diversity, there was one constant: costs continued to rise.
Florim USA had followed the conventional wisdom in building its IT infrastructure. But, as a small company, it could no longer afford the risks associated with that infrastructure—or that wisdom.
“We were ready for a new IT strategy, one that would limit our risks and maximize our returns,” says Nath.Solution
Nath knew that the new IT strategy that Florim USA needed could be summed up in one word: standardization. Instead of point solutions of varying degrees of compatibility, the time had come for Florim USA to adopt a truly standard approach to IT, one that would simplify and streamline IT management, reduce costs, boost productivity, make scalability cost-effective, and deliver greater value to the company.
Choosing a Standard
But which technology was the one on which to standardize? Florim USA considered that question in 2006 when it began planning for an SAP ERP system to replace its older ERP system. Continuing to host its ERP solution on an AS/400 would require major expense and continue the separation among the company’s operating systems.
Nath took into account the database he wanted to use with SAP—the then-current Microsoft SQL Server 2005 data management software. Nath had compared SQL Server to Oracle and found it superior on licensing, ease of use, and total cost of ownership (TCO). “We wanted a platform for SAP that we could set up quickly, inexpensively, and reliably, with the staff we already had,” says Nath. “We adopted Microsoft technology.” The SAP environment is now supported by SQL Server 2008 R2.
The more that Florim USA looked at Microsoft technology, the more it liked it. “We chose to standardize on Microsoft technologies because, even before we looked at the TCO value, the amount of time that we’d save in IT management was too much to ignore,” says Seay. “For everything we needed to do—application deployment, updates, and managing compatibility with partners, vendors, and customers—the best case scenario was using Microsoft.”
Florim USA had deployed an Active Directory Domain Services domain for the SQL Server deployment. The next year, the company decided to make greater use of it. The Novell GroupWise messaging system had long been “cumbersome to maintain,” according to Seay. “If there was anything wrong with GroupWise, we’d have to stay overnight to fix it.” Florim USA decided to replace GroupWise with Microsoft Exchange Server, initially adopting Exchange Server 2003 and upgrading, most recently, to Exchange Server 2010 Service Pack 1 (SP1).
But Florim USA did much more than merely adopt Exchange Server. At a time—2007—when virtualization technology was relatively new, the company decided to deploy Exchange Server virtually by using the first virtualization technology from Microsoft: Microsoft Virtual Server 2005.
||We chose to standardize on Microsoft technologies because, even before we looked at the TCO value, the amount of time that we’d save in IT management was too much to ignore.
Systems Engineer, Florim USA
The company didn’t just decide to go virtual. Seay was enthusiastic about the technology. Nath was skeptical. They decided on a challenge: Seay would create the virtual deployment in the lab and Nath would try to break it. The reliability or riskiness of the virtual technology would be decided by the result. Nath deleted drivers and databases. He corrupted the code. And each time, Seay used Microsoft virtualization to restore Exchange Server as though Nath had never touched it—and he did so in just 30 seconds each time.
Florim USA’s evaluation didn’t stop there. The company also created virtual labs for VMware and Citrix, compared them to Virtual Server, and declared Microsoft the winner. The company adopted Microsoft virtualization, which it has since upgraded, most recently, to the Hyper-V technology in Windows Server 2008 R2 SP1. The current environment is 97 percent virtualized (only SAP continues to run on physical servers), with 40 virtual machines running on six physical hosts, including Dell PowerEdge 2950 servers and Dell R710 servers.
“Placing an early bet on virtualization ran counter to conventional wisdom for a small company because it seemed to increase our risk,” acknowledges Nath. “But our strategy for IT adoption was based on the idea that being early adopters would actually decrease risk. With virtualization, even if we made some big mistake and crashed a server, we could bring it back up immediately. If we had a hardware failure, we could bring the software server back up immediately on another physical machine. The alternative is spending time and money to bring a physical machine back up under emergency circumstances. Our early adoption of Microsoft virtualization eliminated this risk for us—and eliminated the risks inherent in the early adoption of other technologies.”
Seay has a more succinct way of putting it: “Adopting Hyper-V was an obvious winner. You get it; you use it; you love it.”
He points to the performance of Exchange Server (which more than doubled the speed of server response times compared to GroupWise) combined with the benefits of Virtual Server (more uptime, fewer servers, less IT management) as factors that confirmed the decision to standardize on Microsoft technology.
Making Multiple Uses of a Collaboration Platform
In 2007, Florim USA turned its attention to user support. To make that support faster and more effective, Nath and Seay created their own help desk, based on Windows SharePoint Services in Windows Server. The help desk uses email and workflow to receive and route help requests efficiently. It stores issue resolutions in a content management site, where they serve as a knowledge base to guide both technicians and business users.
The company expanded its use of SharePoint technology to include document management for a change-management process based on the Information Technology Infrastructure Library, as well as for International Standards Organization and Standard Operating Procedures content. It upgraded the Windows SharePoint Services deployment to (most recently) Microsoft SharePoint Server 2010, and it used the technology in other applications—such as department portals.
||Adopting Hyper-V was an obvious winner. You get it; you use it; you love it.
Systems Engineer,Florim USA
It is working on a portal that will draw real-time SAP data from SQL Server into a Microsoft business intelligence portal to deliver real-time production and sales data never before available. It also will use SharePoint Server and the Microsoft InfoPath information gathering program to power a change-management system.
Modernizing the Licensing Model
To make its expanded use of technology as inexpensive as it is effective, Florim USA shifted from an open-license model to one based on Microsoft Enterprise Client Access Licenses (ECALs), Software Assurance, and, most recently, an Enterprise Agreement. The Microsoft licensing programs give the company access to a range of enterprise capabilities, such as Microsoft System Center management tools, Forefront endpoint protection, email archiving, Windows Virtual Desktop Access technology, eLearning, and the Microsoft Home Use Program.
The company updates its infrastructure to new versions of Microsoft licensed technologies whenever they become available, without incurring additional fees. It also scales up its infrastructure on demand to cover more users and more computing more cost-effectively.
Bringing the Desktop Up-to-Date
The adoption of Microsoft technologies at Florim USA continues, at a pace and to an extent seldom matched by companies of its size. The company upgraded to the Windows 7 Professional operating system and the Microsoft Office 2010 business productivity suite in 2010. Nath and Seay used Windows Deployment Services to push out a single custom image to 120 computers in three days, incurring no flaws and no interruption to employees.
In 2011, the company chose Microsoft technologies to update and expand its communications services. It used Microsoft Lync Server 2010 to introduce presence and instant messaging, and unified messaging for a single email/voicemail inbox. It also used Lync Server to replace the limited, expensive GoToMeeting system with a broader and more cost-effective web, audio, and videoconferencing system. To replace the NEC phone system, which Seay says was expensive and proprietary. Florim USA will deploy Lync Server for voice over IP.
Contemplating the Cloud
Florim USA also plans to implement both private and public cloud solutions using Microsoft technologies. A private cloud implementation will offer storage, servers, and application software to the company’s remote affiliates anywhere in the world. A public cloud—Florim USA anticipates adoption of the Windows Azure platform for cloud computing—will support an additional tier of disaster recovery. It will also contribute to a hybrid cloud/self-hosted deployment of Microsoft Office technologies, including the cloud-based Microsoft Office 365.
“We’re a small company but we like to think—and act—like a big one,” says Nath. “That’s how you get to be a big one.”Benefits
Florim USA wanted a technology environment that would, in Nath’s words, “reduce the risks and maximize the returns” to the company. By standardizing on Microsoft technologies, the company has achieved massive cost savings, productivity growth, and more effective business processes.
Reduced Costs by $3.7 Million
Florim USA has saved U.S.$3.7 million over the past four years, thanks to its strategic adoption of Microsoft technology as its standard, compared to the estimated costs of continuing to expand its previous infrastructure. The savings come from a variety of sources, including: hardware savings, licensing savings, reduced staffing, and reduced vendor expenses.
||We’ve gone from a reactive IT department, always putting out fires, to a proactive department that can anticipate and address the needs of the business. That’s what our standardizing on Microsoft has accomplished.
Head of Information Technology, Florim USA
The hardware savings have come from a switch to less expensive hardware, server consolidation, and a reduced need for equipment. For example, for the initial migration of the old ERP system on AS/400 to SAP ERP on Windows Server, expanding the AS/400 environment to accommodate development, test and quality, and production environments would have cost about $750,000. Instead, Florim USA adopted a three-node cluster of Dell 2950 servers, for a total hardware cost of $200,000. In addition, Florim USA avoided the $170,000 cost that Seay estimates it would have required in consulting and other third-party fees to set up an IBM iSeries and Oracle environment; it deployed the Dell servers with internal staff only. The total savings on this deployment was about $720,000.
Florim USA has gained another major, continuing cost savings in personnel. As a result of adopting technology that, as Seay says, “practically runs itself,” the company has reduced its IT staff by 80 percent, redeploying workers to other tasks. The annual savings in operating expenses is $640,000.
Nath credits Microsoft licensing for a simple, flexible licensing structure that makes it easy for the company to stay in compliance and to expand coverage to more workers and more applications as needed. Florim USA also gains affordable tools that eliminate the need to retain or adopt third-party solutions. For example, a third-party set of management tools would cost Florim USA about $150,000—without necessarily providing the same value. The company also avoided a $30,000 investment in migration tools when it moved from GroupWise to Exchange Server.
The greater reliability and uptime that Florim USA has gained from adopting the Microsoft environment decreases costs for the company in other ways, too. Seay estimates that mail server failures cost the company $10,000 each. By adopting Exchange Server and hosting it on servers virtualized with Hyper-V, Florim USA avoids those costs, which used to total $20,000 to $30,000 per year.
The company has gained further savings from its adoption of Lync Server. Florim USA formerly spent $15,000 annually for 15 user accounts that were limited to web sharing. Now, the company saves that cost and much more by using Lync Server, which provides both web and videoconferencing and which can support far more than the 30 to 40 people that Florim USA now includes in its larger conferences.
The savings have also increased with the company’s newest use of Lync Server for voice communications. Seay estimates that if the company had expanded its existing phone system, it would have spent $15,000 on hardware and software, plus another $10,000 in consultants’ fees. In contrast, Florim USA spent only $11,600 on handsets to deploy Lync Server for voice. Microsoft will provide an architecture design session at a Microsoft Technology Center without charge, which eliminates the consultant fees. Also, Florim USA uses training vouchers included in its Software Assurance package to train IT personnel at participating Microsoft training centers at no charge. Total savings for the voice deployment are $13,400—46 percent lower than the cost of expanding the NEC system.
“We couldn’t afford to do what we’re doing with anything but Microsoft,” says Seay simply.
Boosted IT Productivity by 1,400 Percent
With the IT staff reduced by 80 percent, it looks like the IT team at Florim had a productivity gain of 400 percent. But looks can be deceiving, because the productivity story is even better than that. While it required 10 people to manage the environment for 250 users, the IT team currently also serves another 350 remote users who work for the company’s Italian parent company and its subsidiaries. That’s a total of about 600 users, and it means that IT productivity has increased by 14 times (1,400 percent) compared to the previous environment.
“We knew that we needed to provide support for growth,” says Nath. “Expanding all of the platforms we used to have would have been a disaster. Standardizing on Microsoft was the key to our success. We used the Microsoft tools and efficiencies to master the challenges that the business gave us—I think better than any of us had anticipated.”
For example, support requests are down by 80 percent, due in part to employees finding the Microsoft technologies more reliable and easy to use, as well as to the online knowledge base, which employees use as a self-service resource. Nath and Seay respond to users on the remaining calls in just 10 percent of the time it used to take, due to the fewer calls, of course, but also due to the SharePoint help-desk site they built, and to the fact that they need to master just one set of technologies—Microsoft technologies—to support the infrastructure and their users.
Nath and Seay see efficiencies in many of their daily tasks. Setting up a physical server—one of the key responsibilities they were hoping to address with the move to Microsoft technology—used to take a couple of hours and had to be done about twice a week. They have reduced that four-hours-per-week total to mere minutes with their use of Hyper-V virtualization. The time they save is reinvested into supporting more users and implementing more strategic functions for Florim USA.
“We’ve gone from a reactive IT department, always putting out fires, to a proactive department that can anticipate and address the needs of the business,” says Nath. “That’s what our standardizing on Microsoft has accomplished.”
Gained Faster, Cheaper, More Accurate Business Processes
By standardizing on Microsoft technologies, Florim USA has gained the ability to use those technologies together in ways that better serve the business—something that eluded it with the diverse and often incompatible technologies it supported before.
For example, the real-time SAP reports that executives and managers can view through a SharePoint portal include business process analyses. One of these analyses indicated that the company’s manual, vendor-based handling of electronic data interchange (EDI) transactions between Florim USA and its suppliers was ripe for an overhaul. Florim USA replaced that process with an automatic process that operates directly from SAP. EDI transactions are now handled faster, less expensively, and more accurately. Now, Florim USA saves $10,000 annually in transaction exchanges with just one customer, and it regains 31 hours per week in staff time formerly spent on EDI processing.
“The automated EDI process we adopted is another example of how we’ve reduced risk,” says Nath. “We’re not dependent on a vendor to process our transactions, we don’t lose employee time, we avoid inaccuracies and the need to go back and correct them, and we reduce expenses and increase cash flow. Standardizing on Microsoft has brought us gains like this throughout the company.” Microsoft server product portfolio
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