Kurt Bradley has been a friend of mine since the late 80’s. His business, Bradley Consulting, was one of my accounts as a Solomon Software Regional Manager. Kurt worked and lived in Houston at the time and still does.
Kurt has a Bachelor’s degree from the University of Michigan and an MBA from
Boston University. He worked for years as a financial analyst and corporate
planner at Fortune 500 firms before tiring of corporate life and starting an
accounting software consulting practice. Kurt really knows Dynamics
SL.
Jack Boyer: Kurt you were speaking to me about a client of
yours that used an old, unsupported version of Dynamics SL with a maintenance
plan that expired in 2006. You mentioned that there seemed to be little hope for
them in upgrading until you rethought the problem and found one of the hosting
firms for Dynamics SL that helped you solve their issues. Can you explain what
happened and what you offered?
Kurt Bradley: They were in a bad situation. And to
exacerbate the problem, everything about their IT environment was no longer
supported by the various hardware and software vendors. Obviously, this put
their ability to process key accounting functions at risk, including payroll
processing. Maybe vendors can be stalled, but not employees. I have seen
firsthand where employees will not go home until they have their check in hand.
Nobody is happy and the employer/employee relationship is strained. However, for
various reasons, they did not want to invest in the purchase of a “current” IT
infrastructure, a Dynamics SL upgrade, and a new software maintenance plan that
included penalties.
What really scared me was when they called and said that a virus had
spread through their system and SL was not working. I told them to have their IT
team eradicate the virus first. If that did not work, then we would have to
rebuild the system. The problem is that it is almost impossible to rebuild an
old system. It is far more expensive to recreate an obsolete, unsupported system
than to upgrade one. Fortunately, eradicating the virus was the solution.
In summary, they could not stay in their current situation, but they
could not afford to do anything about it. So we had to rethink the situation.
Recently, Microsoft introduced a new SaaS (Software as a Service) license
agreement that truly creates a paradigm shift. It makes things possible that
were not possible before in the Microsoft Dynamics SL world. We could upgrade
them to Microsoft Dynamics SL 2011 in a “state of the art” IT infrastructure
with the security that they needed – at a very reasonable cost. The upfront cost
was very little, the monthly cost was very little, and there was no long term
commitment. It created a solution where previously there was none.
Jack Boyer: SaaS or Software as a Service has many
definitions. What is your definition of SaaS?
Kurt Bradley: I generally look at the terms “SaaS”,
“hosting”, and “cloud software” as renting the use of software on a monthly
basis with reduced upfront cost; while the software resides on servers that the
end user never sees. But these are loose interpretations. For example, you can
own Dynamics SL but have a data center “host” it for you on their IT
infrastructure.
Jack Boyer: Being the financial analyst that you are, you
must have done some analysis for when this would make sense for an organization
and when it would not make sense? Can you share with us any of your worksheets
or insights on how this would affect various size clients?
Kurt Bradley: It varies; however, the smaller the user
count the higher the return for the end user. In this case, disregarding the
time value of money, the SaaS solution for a three user system was less for at
least the first 110 months – 9 years. For five users, it was 25 months. And for
end users that use the Project Series and the Service Series, the savings is
even greater. And note that in this case, the end user already owned the license
to Dynamics SL. The cost of the license was not included in the analysis
below.
| Unit Cost | Quantity | Ext. Cost | ||
| Cost to own software that resides onsite: | ||||
| Initial costs to update (note: this process need sto be repeated every three years on average) | ||||
| Upgrade Dynamics SL | 6,000 | 1 | 6,000 | |
| Reinstatement of Microsoft Enhancement Plan | 6,840 | 1 | 6,840 | |
| New server and operating system software | 6,000 | 1 | 6,000 | |
| New desktop computers with Windows 7 and Office 2010 | 1,000 | 3 | 3,000 | |
| New switches and other items to accommodate required faster speeds | 2,000 | 1 | 2,000 | |
| Labor to setup server and workstations | 2,000 | 1 | 2,000 | |
| Total initial costs | 25,840 | |||
| Monthly fees: | ||||
| Dynamics SL Enhancement Fee | 190 | 1 | 190 | |
| Incremental IT consulting fees to support server | 500 | 1 | 500 | |
| Total monthly costs | 690 | |||
| Cost to use SaaS: | ||||
| Initial costs to update (note: updating of the IT infrastructure at the host is no charge, but other costs are incurred every three years on average) | ||||
| Upgrade Dynamics SL | 6,000 | 1 | 6,000 | |
| New switches and other items to accommodate required faster speeds | 2,000 | 1 | 2,000 | |
| One time setup fee of IT infrastructure at host | 3,000 | 1 | 3,000 | |
| Total initial costs | 11,000 | |||
| Monthly fees: | ||||
| Hosting charge, Dynamics SL User License, SQL Server License, and Office 2010 License | 275 | 3 | 825 | |
| Based upon these figures, without applying a time value to money, the SaaS option is less expensive for the first 110 months |
Jack Boyer: You mentioned that you believe it is better
for us as consultants but also better for clients to have their Dynamics SL
license running at a serious data center versus some of the hardware
environments we see at smaller clients. Can you elaborate?
Kurt Bradley: When you look at a computer,
especially a server, you might think that the total replacement cost is the cost
of the hardware and the software. If it is old, then the value is low. But the
biggest replacement cost is the cost of the data. If the data is gone, it is
extremely difficult to replace. And extremely expensive. So it is extremely
important to guard that data and any customizations to the system, such as
custom reports. Did I emphasis the word “extremely” enough? So how is that data
protected?
Many of our clients rely on contract IT support to maintain their IT
infrastructure. Is it part of their contract to makes sure that security updates
are applied and security software is running properly? That they are running
“supported” versions of the software? I have never seen either answer to be
“yes.”
Furthermore, it is the responsibility of the Office Manager or perhaps
the Controller to switch out backup tapes on a daily basis. But do they remember
that duty along with all their other responsibilities? What if they are on
vacation or sick? Are the backup tapes good? Are they even backing up the
critical directories? Do the tapes ever make it offsite? Too often, nobody
knows. It is not their main job, it is not important until it is too late. But
this is critical. Stuff happens. Since Oklahoma City and then 9/11, everybody
has to worry about manmade threats. Disgruntled current and former employees
probably pose the greatest threat to onsite IT resources.
And an “unsupported” environment makes a consultant’s life miserable. A
client might try to force an upgrade with hardware and software that cannot
support the upgraded version of Dynamics SL, but it will result in failure and
expense. Because Microsoft Dynamics SL 2011 relies on some advanced
technologies, operating systems such as Windows XP and Server 2003 will not work
with it. So the consultant is faced with telling the client to spend more money
when money is tight. Nothing happens, the data remains at risk.
More and more, I am finding the solution to be contracting with a large
data center to “host” your software and data. The beauty of this solution is
that these data centers are experts in IT infrastructure. They have bright
people handling tasks that onsite resources consider “back burner.” Data is
backed up. Offsite. The latest versions of operating systems, SQL Server,
Sharepoint, Project Server, Office, and Dynamics SL are offered at an extremely
reasonable charge.
And how do they do it? Volume. They do this all day long; whereas, the
average IT consultant has dealt with Sharepoint or Project Server once or twice.
It is similar to having a car built on an assembly line by craftsmen and
engineers versus having a bright auto mechanic assemble one by hand. Which
offers more value? Which one has a better chance of working?
