February 2004

Contents:
1. Executive summary
2. Financial cost of IT failure
3. Management time
4. Employee morale
5. Customer relationships
6. Why do IT systems fail?
7. What can be done?

1. Executive summary
Technology is the great enabler for modern business, and is also a vital component for overall success. Therefore a modern and reliable IT network is crucial to enable effective customer service, control costs and maximise productivity.

It’s widely accepted that IT systems must be implemented correctly and then constantly and continuously maintained. However, many businesses, especially new or smaller ones, do not have the resources or experience to maintain their systems, with the result being anything from a significant loss of revenue to total business collapse.

In recent years the declining cost of IT hardware has been contrasted by the increasing cost of support services needed to maintain the smooth running of a company’s IT infrastructure. Moreover, IT skills shortages and high staff turnover in IT departments are compounding this problem.

The lack of full-time resources to resolve routine technical glitches is seen as the main stumbling block for effective IT management by many small business owners. Yet, as this paper will demonstrate, this need not be the case. Most IT problems can easily be resolved without the need for full-time, in-house technical support.

The most significant cost to business of IT failure is the loss of trade during a period of inactivity caused by a crash. IT functions and processes are increasingly networked and therefore a problem affecting one system will impact heavily upon others. The challenge for business is therefore to achieve a stable system whilst remaining cost effective.

Deciding how to meet this challenge is relatively straightforward; either businesses employ in-house technical support, outsource to an external supplier, or use a combination of both.

The Remote IT Management Service by PC World Business aims to offer a superior alternative to SMEs that need effective IT management but either lack the staff or cannot justify the expense of employing full-time IT staff.

2. Financial cost of IT failure
Analysts have put the cost of IT failures to business – mainly caused by decreased productivity - at between 0.1 and 1 percent of overall revenue1.

The most significant cost to businesses of IT failure is the loss of trade during a period of inactivity caused by an IT ‘crash’. The implications are huge, considering the increasing reliance of IT in modern organisations. From finance, through to fulfilment, marketing, customer services, HR, communications; almost every department in a business needs IT to function effectively.

With the increased use of corporate networks, a technology problem affecting one business process or department can have a major knock-on effect to the overall IT infrastructure –a spanner in the works that can halt the overall business workflow. While the cost of fixing the problem is relatively easy to quantify in financial terms, this figure often underestimates the true cost to the business. The commonly overlooked, or ‘unseen’ costs are outlined below.

3. Management time
A great deal of management time is depleted during and after an IT failure – time which could be better spent on servicing existing customers or winning new business.

Business managers need to devote their time to core activities and they depend on the IT infrastructure to operate effectively. When IT fails, managers are forced to turn their attention away from their primary business goals, and this is especially true in smaller businesses where dedicated IT staff are not available.

Most managers usually express a great deal of frustration when this occurs and the adverse effects are not immediately apparent. However, further down the line projects may be put on hold, deadlines missed, and targets not reached.

4. Employee morale
Almost all employees in an organisation are affected by technology failures, as they have to countenance the impact when things go wrong. Most value their jobs and want to do the best they can, which is not easy when the IT system fails and workload stacks up as a result.

Staff morale can also be affected if technology failures occur frequently. Unhappy employees tend to look for alternative employment and therefore staff turnover inevitably increases. This is a significant cost to any business, considering the fact that in 2002 the average cost to a business was £3,462 for each employee and £5,699 for each manager which leaves2.

5. Customer relationships
A business’ reputation depends on being able to service its customers. If a company is experiencing IT problems, customers will not be concerned with the reasons why there is a delay in delivering a service, product or information. Neither are they primarily interested in what is being done to rectify the issue. They are interested in knowing when they will receive what is promised by their suppliers. The stark truth is that they will simply find a supplier who can provide a better service.

6. Why do IT systems fail?

PC World Business has identified the following reasons for the majority of IT system failures:

6.1. Simple problems
The simplest and most straight forward problems always have the potential to be the most difficult ones to deal with, primarily because these issues tend to crop up most frequently. ‘Simple’ problems include when the printer fails to print; a file cannot be found; a user cannot log into his or her PC; access is denied to certain documents. A common rule-of-thumb is that if a business has 25 users, it can expect to have around 50 issues per month. That’s quite a lot to deal with, especially if the business does not have the qualified resources to deal with them.

Small as these problems seem, if an employee is unable to print documents, the productivity of that worker will suffer considerably.

6.2. Data storage
Many IT systems fail due to lack of data storage, a problem as simple as not enough hard disk space on a users PC. However smaller businesses lack the resources to monitor storage servers on a regular basis. Even for companies with IT administrators, fixing data storage problems is very time consuming, often involving hours of effort in order to solve problems before work can continue as normal.

The problem of data storage occurs when an IT network is set up. Storage needs are assessed on the basis of what is required by the business on the date it was installed, with little room for expansion in the future.

Email is also a major drain on storage resources. People tend to keep emails and many use them as their main storage and filing system on their PC. These will often include large attachments such as Excel, Powerpoint and Word documents.

With data storage levels increasing exponentially, it’s not long before the data storage capacity is reached and businesses require IT support.

6.3. Back-Up failures
It’s an unfortunate fact that many companies are at risk of suffering a complete data loss because they lack a reliable back-up solution. Most companies are not prepared for, or experienced in, retrieving data when something goes wrong, even though most businesses view customer information as mission critical for not only servicing customers but also for staff productivity.

A common issue surrounding back-up is that while many businesses might have a back-up system installed, few take the time to check that it is updated regularly and working effectively. Similar to data storage, it is necessary to make regular inspections and to assess whether there is enough back-up space to accommodate growing data requirements. PC World Business recommends daily back-up procedures, otherwise new data will be lost, which is often more important for day-to-day operations than archived information.

6.4. Security vulnerabilities
Many businesses don’t realise the impact a virus can have until one disables their system. Non-existent anti-virus protection, security holes and irregularly updated virus definitions are some of the reasons businesses fall prey to common, simple-to-resolve viruses. According to NT Bugtraq, there were more than 4,000 vulnerabilities discovered in Windows in 2003. This figure has been doubling year-on-year, and is likely to increase to 8,000 in 2004. It is therefore essential that businesses make sure that their systems are patched at frequent and regular intervals and that anti-virus software is constantly maintained and updated.

6.5. Unqualified IT supervision
Finding a qualified IT manager to handle all types of technical issues is a difficult task for all businesses, but is harder for smaller organisations. There is no “generic small business IT manager,” therefore it is sometimes impossible to find the right person with the right level of experience and ambition.

More often than not, they slot in-between the unqualified and the overqualified, and both situations can be more harmful than good. A good IT manager needs to be a jack-of-all-trades, competent in handling serious issues such as network outages and website problems as well as mundane, everyday problems. However, even for the most experienced of technicians, it’s the infrequent problems which often take the most time, as they need to re-familiarise themselves with procedures, such as adding new email users or dealing with issues in various software applications.

6.6. Poor or non-existent asset management
It becomes clear, often too late, that many businesses are neglecting the management of their IT asset portfolio. Vital in order to determine when a device or software requires maintenance, upgrading or replacing, IT asset management is a complex and specialist field which, if handled correctly, can be a source of business advantage. Future planning, scalability and system upgrades are easily implemented if a full IT equipment inventory is available. However, many businesses neglect to audit equipment for these purposes, incurring extra costs and downtime when new systems and software are installed and compatibility issues arise.

7.What can be done?
Clearly, most problems can be easily resolved by implementing procedures to check and update storage, back-up and security. However, the method by which a business sets up preventive systems depends on the type of IT support each business uses.
A business might, for example, employ dedicated IT support staff, who understand systems in-depth and can design procedures to avoid these problems and increase uptime dramatically.

However, there are many peaks and troughs in IT management. For most businesses, there are periods when the IT support manager may not have a great deal to do, and other times when he or she will be swamped with problems to resolve. Full-time IT employees may not be the best (or affordable) solution; an alternative is to outsource IT support for routine site visits to make all the required checks and to deal with more complex technical issues.

In fact, many small businesses rely entirely on their local hardware suppliers who also provide support. This clearly does not have the advantage of having an in-house engineer who would set up and monitor the system. However, resources often mean that this is the only option.

Remote management may be a more appropriate method than either an in-house engineer or traditional outsourced support. This is where IT systems are monitored over a network to alert an engineer of potential problems.

Now it is even possible to fix network issues without an engineer needing to be physically present to fix the problem. In fact, with PC World Business Remote IT Management, 70 percent of help desk calls are resolved in less than fifteen minutes.
Remote management is more than just outsourced IT support. Initially an engineer will analyse and audit what software and hardware is on the network and how it is set up. Asset management techniques are also employed to understand the business’ IT investments and make valuable recommendations.

After two weeks, the remote management system understands the customer’s network inside out by checking logs, anti-virus updates and by speaking regularly to end users. Engineers proactively monitor the network, which means that they keep an eye on it 24/7 and are ready to act promptly when things go wrong. In addition, engineers are able to build up a good degree of knowledge quickly about the business, its IT systems and the people they serve.

Fortunately, businesses now have a variety of choices to suit their technical and financial needs. Businesses on the route to success will consider the available options, assess current and future needs and act accordingly. Technology should no longer be the catalyst for loss of productivity, staff moral or revenue.

1 The Costs of Enterprise Downtime 2003, Infonetics Research
2 Chartered Institute of Personnel Development Labour Survey 2002
3 Chartered Institute of Personnel Development Labour Survey 2002
ENDS