Guests Check-in to a TelePresence Suite

The American hospitality industry has suffered from the global economic meltdown. While room rates sank nearly 9 percent for the U.S. hotel industry overall, luxury hotels saw their rates decline more than 16 percent, according to a market study by PricewaterhouseCoopers.

Was the "frugal consumer" phenomenon to blame? Actually, they're not the main culprit. Business people that chose to travel to meet their customers and suppliers are still not likely budgeted to stay at the pricier hotel properties.

What's a savvy upscale hotelier to do, given this scenario? Follow a customer demand trend that has gained momentum -- where spending has risen, based on a solid ROI justification.

Starwood Hotels & Resorts unveiled its first in-hotel Cisco TelePresence meeting suites with a virtual, interactive meeting spanning across two continents. The W Chicago City Center and Sheraton on the Park Sydney are the first in Starwood's global portfolio to introduce the new meeting facilities.

Borderless Face-to-Face Collaboration in Action
Guests and corporate clients were brought together in a true-to-life meeting setting, despite more than 9,000 miles apart and the 17 hour time difference. Participants in both locations had a seat at the table and were able to meet "face-to-face" -- utilizing ultra-high definition video, superior audio and life-size imagery of all participants.

In June of 2009, Starwood announced a partnership with Tata Communications and plans to build Cisco TelePresence rooms in 10 properties worldwide. In addition to the Chicago and Sydney hotels, two more TelePresence meeting suites will open in the first half of this year -- including the Sheraton New York Hotel & Towers and Sheraton Centre Toronto.

Other planned locations include The Westin Los Angeles Airport, with the anticipation to expand the offering to key domestic and international business markets such as Dallas, San Francisco, Brussels, Paris, Hong Kong and Frankfurt. As an industry first, reservations for these TelePresence rooms can be made instantly using the Tata Communications online portal.

"The launch of the new Cisco TelePresence meeting suites at the W Chicago and Sheraton on the Park Sydney is another example of Starwood's commitment to innovation by offering our clients an exciting, new meetings solution that facilitates a 'face-to-face' meeting in the same room regardless of global location," said Christie Hicks, Senior Vice President of Global Sales for Starwood. "We have a great partner in Tata Communications and look forward to continuing opening new meeting facilities throughout our portfolio of hotels around the world."

Latest Video Meeting Technology, On-Demand
Cisco TelePresence provides life-like, high definition, conferencing facilities with superior audio, video and environmental qualities allowing participants to meet their colleagues, customers and business partners across a virtual table. The public facility enables those who don't have a corporate TelePresence room to utilize this new benefit at an affordable per-hour rental rate.

Tata Communications has several operational public rooms in India (Mumbai, Bangalore (x2), Chennai, Hyderabad, Delhi and Gurgaon), UK (London) and USA (Boston), Manila with PLDT in the Philippines and Johannesburg with Neotel in South Africa.

The Secret of Business Growth in 2010

Having had their fill of the economic downside, business leaders are truly ready for the eventual upside. Apparently, U.S. companies are preparing for a global economic recovery to begin in the first half of 2010, according to a new "Road to Growth" market study from AT&T.

Key study findings include the following insights:

Business Agility and ROI Pressures
In today's economic climate, U.S. companies have significantly shortened the time frame over which a Return on Investment (ROI) is delivered.

More than half of U.S. IT executives stated they are under pressure to deliver a return on investment in half the time than their previous efforts. As a result, two-thirds cited that the change has affected their IT budgets, strategies and priorities.

The study found that companies are less willing to invest in longer-term projects -- where the return does not come quickly. One CIO stated that IT projects must give at least a 100% ROI in 12 months -- otherwise, the project is terminated.

Shrinking Costs, While Growing the Upside
No surprise, regarding the top-of-mind challenges. Cost cutting and increasing revenue remain the two primary business goals. To achieve those objectives, survive the recession and move towards growth, business technology strategies are focused on:

Reducing operating costs: 87 percent cited "reducing operating costs" as "extremely or very important." Improve collaboration with customers and partners: 85 percent cited "improved collaboration with customers and partners" as "extremely or very important." Enhancing workforce performance and productivity: 83 percent cited "enhancing workforce performance" as "extremely or very important."

Rise of the Any-Term Business Strategy
The study found that U.S. companies employ multiple strategies to address business goals, and do not distinguish between short-term and long-term strategies. It appears that U.S. companies are reducing the time period for their long-term forecasting until after the recession is over.

Moreover, the role IT plays in helping U.S. companies achieve long-term strategies is very similar to the role IT plays in supporting a company's short-term business strategies.

Ongoing Role of Business Technology
IT investments and priorities are very focused in a couple of key areas. The study found that "business continuity and security solutions" will have the biggest positive impact on business growth as U.S. companies prepare for an economic turnaround.

This is closely followed by "enterprise mobility solutions" and "Web delivery solutions." Areas of IT investment that are expected to have a high to moderate impact on businesses are "unified communications services" and "hosted solutions."

For more information, and a copy of the executive summary, visit the AT&T Road to Growth Study on their website.

How to Unlock the Power of Virtualization

Virtualization uses technology to remove the physical barriers associated with computer servers and applications -- enabling the consolidation or replacement of servers, storage, network and other physical devices.

As a result, your business can better use computing capacity and drive more value from IT resources as well as consolidate data centers and significantly lower energy consumption.

For companies who need guidance on a virtualization project, Verizon Business offers these five tips -- culled from the company's years of experience handling complex IT installations and expertise in implementing and managing virtual environments:

1. Make sure you're looking at the big picture: A business should first complete a thorough assessment of its current IT environment and computing resources, including a full review of all servers. Once the enterprise has a better understanding of its infrastructure, it is easier to determine which computing resources, such as servers and devices, are candidates for consolidation.
2. Enlist vendor support: After compiling a list of applications that can be virtualized, it is important to confirm there will be very few, if any, issues with vendor support. Some vendors, especially smaller ones, do not support their software on virtualized platforms.
3. Evaluate licensing costs: When assessing applications for migration, evaluate the licensing costs associated with them. While consolidating multiple servers and devices into a single virtual machine will lower hardware and facility costs, this does not necessarily apply to software licensing costs. Many vendors still charge based on total available power and the number of physical applications. If that's the case, consider working with vendors that embrace more flexible licensing models.
4. Avoid common bottlenecks: Carefully assess the memory and storage requirements for applications moving to the virtual environment. Memory and storage can severely limit how many virtual machines a host can support. A common scenario is an environment with consolidated storage and a high number of mobile BlackBerry users, requiring large memory and storage needs. Therefore, assessment, management and proper allocation of applications per virtual machine are key.
5. Security, security, security: Security should be a top priority; it should be built in from the ground up to ensure the new environment comes with the right safeguards. Enterprises also should pay close attention to relevant industry regulations. For instance, businesses that store, handle or process customer payment information must maintain compliance with the Payment Card Industry Data Security Standard (PCI DSS), a comprehensive set of requirements for enhancing payment account data security. In that case, PCI DSS compliance would be a key requirement for the new virtual environment.
   

"Virtualization holds huge promise for the enterprise," said Michael Marcellin, vice president of Verizon global managed solutions. "Its ability to increase efficiency and agility while managing costs is unparalleled. With that potential, however, comes complexity concerning deployment and implementation. Our hope is that enterprises will take this promising technology to heart and embrace our suggestions -- based on our more than 10 years experience managing complex IT infrastructures -- on how best to utilize it."

Verizon Business offers a wealth of IT and hosting solutions to help customers meet their most-pressing IT needs in today's dynamic business environment. As we've previously reported on the Business Technology Roundtable, enterprise and small-business executives are actively adopting the selective out-tasking of applications to these managed cloud services.

Demand for Lean, Green Business Technology

According to a recent market study by Datamonitor, the current global economic recession may also prove to be a significant driver for Green Computing. Their market assessment raises lots of questions -- including, is it better for the world, and overall business profitability, if executives cut-back on their IT investments?

"The global economic recession has spurred a paradigm shift in the way organizations evaluate, budget for and deploy green IT," says Rhonda Ascierto, senior analyst at Datamonitor. "The downturn has also resulted in green IT trends for datacenters, client devices and asset lifecycle management, as well as re-shaped return on investment (ROI) models."

Datamonitor believes green IT that's intended to eliminate the need for capital expenditure -- such as datacenter virtualization, facility design and asset lifecycle management -- has become very important, especially as IT budgets are trimmed.

Lean and Green in 2009
Their research uncovered that lean IT budgets will likely be the norm in 2009, and that organizations will predominately seek green IT solutions because they're cost-effective. This represents a significant market trend, in their opinion.

Green ROI models are becoming compulsory and shorter. In order for green IT vendors to satisfy these new ROI requirements, they're being forced to develop more efficient solutions. However, when it comes to new IT equipment investments, if "less" is more, then "none" can be even better.

Business technology budget constraints force CIOs and IT managers to think beyond legacy approaches to a current problem. As a result, organizations that face critical datacenter limitations are already considering alternatives to building new datacenters or upgrading existing facilities.

Alternatives to IT Capital Investment
Those alternatives include IT leasing, managed services, virtualization software, cloud computing and software-as-a-service (SaaS). Datamonitor believes datacenter resources will increasingly be hosted in a cloud-based environment, which should -- at least theoretically, they say -- fall under the green IT banner.

Clearly, it really doesn't matter what you call your own concerted plan to reduce and contain operating expenses -- in contrast, what matters most is that you take appropriate action now.

Perhaps you're still wondering if the selective out-tasking of business technology is something that your executive team should act upon. If so, you might consider also reading the recent editorial in a mainstream business magazine entitled "The IT Companies Shouldn't Buy" and then ask yourself some of the same fundamental questions about your own business strategy.

Global Multi-tenant Service Provider Clouds

Multinational companies typically have more complex computing and networking technical support requirements, because their business technology applications can span over numerous locations with very diverse operations.

Business and IT leaders are currently exploring managed cloud service options, and they're comparing all new offerings from qualified service providers with international expertise.

BT, the UK-based provider of communications services, revealed that it will be launching a Virtual Data Centre (VDC) service in the coming months, supporting the needs large business and public sector organizations.

VDC provides a dynamic and virtualized infrastructure platform that enables their customers to consume IT and networking Infrastructure as a Service (IaaS) -- it essentially forms the base for future cloud services.

BT says that VDC delivers the benefits of enterprise-class cloud computing to customers at a significant saving -- when compared with a standard hosted infrastructure deployment.

Appeal of Infrastructure as a Service
"Any Infrastructure as a Service offering that can provide a platform where organizations can scale their computing, network, and storage requirements in real-time, according to their needs, will have obvious appeal." said Roy Illsley, Senior Research Analyst at research company Butler Group.

Customers will be able to purchase virtualized components and access them over a pre-provisioned infrastructure. Virtual server, storage, security and networking capabilities will be available, automated and orchestrated through an online portal.

"BT is one of the very first movers in Europe with its Infrastructure as a Service offer and the only global provider that will be deploying this service across a vast network of data centers both in the UK and Europe," said Dustin Kehoe, Principal Analyst, Current Analysis.

"Other differentiators for BT include a strong central platform allowing customers to provision services on the fly and a solid professional services organization to support customers with higher end requirements."

Apparently, BT VDC is just one of a number of new offerings that will be announced by BT Global Services this year, focused on helping business customers achieve a competitive edge.

Demand for Cloud Internetworking
There's an emerging term used to describe hybrid scenarios -- when enterprise applications can seamlessly move between their internal and external clouds, leveraging the elasticity and multi-tenancy that a cloud infrastructure offers.

We'll be hearing more about the notion of a Virtual Private Inter-Cloud.

What's the primary benefit for your business? Cost reduction -- with a "pay as you grow" IT service. You eliminate capital investment and significantly reduce operational expenditure, while still maintaining secure control of your data.

Demand for Cloud Infrastructure as a Service

Some market studies continue to identify confusion regarding the true meaning of cloud-based services, and the apparent benefits derived by the early-adopters. One recent example comes from a survey of financial professionals in the UK.

However, there is already growing demand from informed executive business and IT decision makers that are eager to move forward with various forms of cloud service deployments.

In fact, Forrester Research has embarked on a new "Cloud and Virtualization Survey Data" series that offers key insights on where the market demand is developing, and they also debunk several stereotypes.

According to Forrester's assessment, Infrastructure-as-a-service (IaaS) offerings, one of the three types of cloud services, is an area of cloud computing that currently receives the most market attention. It centers on two forms of capability: 1) pay-per-use hosting of virtual servers at an external cloud service provider, and 2) operating an internal cloud, where your IT department offers virtual servers-as-a-service.

Enterprise Will Lead the Momentum
Forrester reviewed their latest survey data and uncovered the following indicators of likely buyer interest in, and adoption of, these two forms of IaaS:

• About 25% of all enterprises plan to adopt IaaS via an external service provider.
• Firms are slightly less interested in internal clouds than they are in external IaaS.
• Large business respondents report more awareness, interest, and adoption of external IaaS than small business -- they also report the same for internal clouds.
  

Forrester defines the three layers of the cloud services stack as follows:

Software-as-a-Service (SaaS) - End user applications, delivered as a service rather than as on-premise software.
Platform-as-a-Service (PaaS) - Application platform or middleware-as-a-service on which developers can build and operate custom applications.
Infrastructure-as-a-Service (IaaS) - Compute-, storage-, or other IT infrastructure-as-a-service, rather than as dedicated capability.

Once again, pay-per-use hosting of virtual servers and internal cloud are part of infrastructure-as-a-service.

Cloud Service Adoption Drivers
Forrester reached an interesting conclusion from their market assessment -- that's contrary to conventional wisdom regarding the initial demand for cloud services. Enterprises are leading the adoption, not small and medium sized businesses (SMBs). Moreover, they have different technology preferences and comfort levels with virtualization.

Forrester also believes that early adopters of IaaS service offerings are driven by the instant provisioning of servers and the pay-per-use pricing model. Furthermore, the enterprise IT operations buyers, unlike developer buyers, may want to integrate their on-premise infrastructure with anything they deploy to a service provider, either temporarily or permanently.

Demand for IT Managed Cloud Services

Business technology has gone through several major changes over the decades. Each transformation brought new ways to perform work -- it also allowed some organizations to leapfrog over their less-agile competition.

"Today's CEO concerns provide an advanced look at what will become CIO priorities in six to 18 months," said Jorge Lopez, vice president at Gartner, Inc. The focus for the IT agenda in the face of economic uncertainty and risk is flexibility, and renewed business agility.

According to Gartner's assessment, CIOs need to ensure that their IT operations are ready for the ongoing challenges and shifts that are sure to emerge.

Defined as the ability to achieve financial and strategic plans, effectiveness gives enterprises the flexibility to meet challenge with change. So, how will CIOs improve effectiveness to meet new economic and operational challenges?

Business Imperative for Cloud-based Services
IT leaders are increasingly being asked to move all non-strategic IT functions to the cloud; to develop IT core competencies and skills to manage virtual resources; and to embrace new applications that capitalize on cloud computing, collaboration, mobility and social media.

Worldwide cloud services revenue will reach $56.3 billion in 2009, a 21.3 percent increase from 2008, according to the latest study by Gartner. The market is expected to reach $150.1 billion in 2013.

Much of the cloud computing news centers on systems infrastructure as a service (IaaS). In 2008, these services accounted for only 5.5 percent of the overall cloud services market and are forecast to reach 6 percent in 2009.

"Cloud-based infrastructure services are expected to see significant adoption through 2013," said Ben Pring, vice president at Gartner. "This segment probably has the largest range of possible outcomes, depending on how aggressively cloud computing is embraced."

Cloud application services, evolving from software as a service (SaaS) offerings, were almost twice as large as the market for systems infrastructure and will continue to show strong growth.

Lower Cost Drives Cloud Services Growth
Over the next five years an increasing array of application functionality will become available as IT managed cloud services -- to supplement those current cloud applications.

"The IT market trends for the next couple of years remain highly uncertain. While short-term growth is expected to be inhibited, the potentially lower cost of cloud services is attractive to customers and will drive growth for these offerings," said Mr. Pring.

Given that backdrop, what new demand are you experiencing for cloud-based services? Are you reaching out to service providers, to learn more about their evolving on-demand service offerings?

Business Video Impact is Far Reaching

Many of the visitors to the AT&T booth at the VoiceCon 2009 are having their first experience of a TelePresence solution in action. Tina Vestal, customer care center manager at CHEP, perhaps sums it up best with her assessment -- "it's amazing!"

Earlier this week, BAE Systems Land and Armaments, part of the third largest defense company in the world, agreed to enhance their global employee collaboration and productivity with the AT&T Telepresence Solution.

BAE Systems will use Telepresence to provide an in-person meeting experience with executive leadership and engineering teams across the U.S., and the United Kingdom. This capability will also be expanded to Sweden, South Africa and other regions in the future.

Their TelePresence applications are intended to be far reaching, across numerous parts of their organization. Live video-based meetings will help them accelerate decision-making processes and problem-solving for high-priority projects.

More Productive Meetings, Less Unproductive Travel
With the anticipated increase in productivity through engineering team collaboration, and frequent management team interactions, the BAE Systems participants will also realize direct operational cost reduction.

AT&T's fully managed service includes in-room equipment, installation, full monitoring and management of the application, network provisioning, remote help desk service and on-site equipment maintenance and repair.

"We anticipate a reduction in travel time, costs, and realize other benefits -- including improved employee safety and quality of life through this environmentally-friendly tool," said Bharat Amin, VP & CIO at BAE Systems Land & Armaments.

BAE Systems is a global company engaged in the development, delivery and support of advanced defense, security and aerospace systems in the air, on land and at sea. They employ 105,000 people, and have customers in over 100 countries worldwide.

Updates:
Also view the Day Two video commentary from demo visitors.

Transforming Healthcare with Creative IT Solutions

Healthcare is constantly in the spotlight as aging populations, technological advances and high-costs threaten the very fabric of the current system. Healthcare providers and insurers are under constant social, political and shareholder pressure to both improve quality of delivery and lower operational costs.

To proactively evolve, forward-looking insurers and providers need to focus on:

• Access -- ensuring that patients are properly insured and the facilities are available to treat them;
• Affordability -- driving down costs across all parts of the system;
• Quality -- ensuring quality and successful treatment outcome;
• Sustainability -- focus on managing labor force resources and green issues.
  

New Approaches to Technology Driven Transformation
Despite being an industry heavily dependant on the use of the latest in medical technologies, healthcare has traditionally been slow to use information technology and services to improve their business processes. Healthcare has some of the most stringent concerns about privacy and security, and regulatory constraints. It is a highly fragmented industry, with over 70% of healthcare typically dispensed by autonomous professionals.

This unique industry structure has resulted in both a lower uptake of technology and the desire for high-cost in-house IT development and operation. Research by Cisco IBSG (the company's strategic consulting arm) reveals that this is beginning to change.

To-date most of the focus has been on using information technology to address the eHealth, or patient records issue, with mixed results. In contrast, Cisco IBSG believes that implementing next generation managed services, outside of the clinical area, can have a significant transformational impact.

Creative Solutions for Challenging Times
We are now seeing both healthcare providers and insurers exploring the potential benefits of managed services to streamline their operations and to improve the overall customer experience. Insurers are eager to encourage competition amongst providers, to drive down costs.

IBSG research indicates insurers are experimenting with using healthcare-specific telepresence solutions to remotely deliver healthcare, reducing costs and improving the overall customer experience.

For example, United Healthcare recently installed a HealthPresence managed service at Cisco's main San Jose, California campus. This allows employees to conveniently access medical support at their place of work, and enables United Healthcare to deliver it using less expensive medical resources in a more streamline process.

Healthcare providers are using managed services to address the cost and quality impacting issues. A hospital wide wireless RFID solution allows caregivers to quickly locate wheelchairs, trolleys and critical equipment, saving not just time and money, but often someone's life. Similar examples exist with locating doctors, identifying their availability, and across other parts of the medical supply chain.

Healthcare providers need to compete on service quality and loyalty. Providers are turning to next generation managed services as a means to enhance their offerings. For example, hospitals are using telepresence kiosks to create in-house concierge services to aid both patients and visitors to improve their overall hospital experience.

Transforming healthcare is going to require radical change. Managed services outside of the traditional clinical area have great potential. However, service providers must work with both insurers and healthcare organizations -- across all aspects of their business -- to develop unique IT solutions that help them to deliver lasting business advantage, and reduce operational costs.

About the author: Stuart Taylor is a Director in Cisco IBSG. Stuart leads thought leadership and engagements with key Service Providers in managed services. He has over 15 years of experience focused on strategy, corporate development, business unit strategy, M&A and operational improvement with large mobile and wireline operators and high technology clients.

Strategic Perspective Impacts IT Investment

While most business leaders globally are planning on keeping their IT budgets flat and there will be no growth in 2009, a recent market study by analyst firm Datamonitor reveals that in some countries, people are much more confident about their future outlook -- with planned IT budget increases exceeding the decreases.

“It is clear there has been a noticeable decline in enterprise confidence. However, the findings are not as negative as might have been expected”, says Daniel Okubo, technology analyst with Datamonitor.

“Despite the rise in the proportion of IT budgets which are remaining flat, there are still a sizable proportion of enterprises which are planning to increase IT expenditure. Technology vendors should be keenly aware that the economic conditions of a country directly impacts enterprise IT budgets.”

Reacting to the Downside
Datamonitor surveyed 520 IT decision makers towards the end of 2008 to gain a better understanding of how business and IT decision makers are reacting to the global economic crisis, and to gauge their confidence levels.

Across all of the 14 countries surveyed in the second half of 2008, there was a rise in the proportion of planned IT budget decreases compared to a similar survey conducted in first half of 2008.

The percentage of IT decision makers who plan to decrease their IT budget significantly in 2009 has risen to 8 percent from 3 percent, over the last 6 months. Apparently, confidence is lowest in the UK, France and Italy.

In these three countries the proportion of respondents planning to decrease their IT budget outweighs those that are planning to increase their IT budget in 2009. Noticeably, there are also a significant proportion of enterprises in the U.S. and Spain that are planning IT budget decreases.

Unsurprisingly all these economies are projected negative GDP growth in 2009.

Thriving on Strategic Anticipation
However, regardless of the bleak outlook for some countries, enterprises in Benelux, Nordics and Australia appear to be much more confident about their future outlook with planned IT budget increases outstripping IT budget decreases.

These economies are expected to be less affected by the economic downturn, with the exception of Iceland, and this is reflected in Datamonitor’s findings. Moreover, rather than invest in new systems and associated software, more forward-looking companies are now choosing a different -- more strategic -- path to meet their IT needs.

Preparing for the Upside
Business and IT decision makers that are evolving to the managed and hosted services model are typically more interested in raising their efficiency and competitiveness, beyond merely cutting IT and networking costs.

While they share their peer group’s concern with the current economic environment, they also are preparing to pre-position their organizations for the eventual recovery. Rather than totally dwell on the negative, they have the foresight to lay the foundation now – enabling them to quickly act upon the upside opportunities.

Next Generation Managed Services Enable Retailers to Innovate

Online competition and access to price information has been squeezing already thin retailer profit margins for some time now. Combined with the added pressures of the economic crisis, many retailers are being pushed to the edge. Sadly, familiar names, such as Circuit City, have already been pushed over the edge.

To survive this crisis forward-looking retailers need to focus on:

1. Efficiency -- making every part of the business as lean and efficient as possible, especially in the supply chain.
2. Cost Removal -- driving out costs everywhere, especially in labor, their second biggest cost after the goods that they sell.
3. Customer Experience -- seeking ways to differentiate an increasingly homogeneous shopping experience.
   

Salvation in Managed Services
Retailers have traditionally been very closed to the idea of managed services provided by third parties. Razor thin margins have made them very risk adverse. There is a general skepticism of service providers, large IT firms, and their understanding of retail or their ability to adequately serve retailer needs.

Those fears and biases are beginning to fade as the reality of economic pressures for cost reduction and competitive pressures for differentiation bite harder than ever before. Retailers are now exploring how managed services allow them to address these monumental challenges.

Research by Cisco IBSG (the company's strategic consulting arm) reveals that successful providers of managed services must address retailer core buyer values:

• Proven Reliability -- to manage risk and complexity.
• Cost Effective -- pay for performance.
• Tailored Solutions -- specific to the retailing industry.
• Focus on Customer Experience -- enabling competitive differentiation.
• Speed to Market -- deliver benefits immediately.
  

Managed Services Enable In-Store Innovation
Many retailers are aggressively applying managed services to innovate. Digital Signage, or the ability to provide targeted multi-media messaging to customers, is being used by retailers such as WalMart and Eddie Bauer to influence buying decisions at the point-of-sale and to increase store traffic. The complexity involved in the deployment, underlying network and operations means that retailers are increasingly turning to proven, managed end-to-end solutions.

Companies like Best Buy and Home Depot are trialing Telepresence kiosks that allow them to enhance the shopping experience by bringing expertise directly to their customers in their stores -- in a scalable and cost effective manner. Service providers that install and deliver these solutions become valued partners who offer unique value-added solutions specific to the retail industry.

The current economic crisis will re-shape the retail business. Resilient retailers who survive and thrive will be those that proactively embrace next generation managed services as a means to attain competitive differentiation. Inventive managed service providers will deploy unique solutions that help to position retailers for the long term.

About the author: Stuart Taylor is a Director in Cisco IBSG. Stuart leads thought leadership and engagements with key Service Providers in managed services. He has over 15 years of experience focused on strategy, corporate development, business unit strategy, M&A and operational improvement with large mobile and wireline operators and high technology clients.

Top Six Motivations for Managed Services

What's motivating you to think about managed network services? Is it cost? If so, you'll be surprised to hear that you're somewhat behind the times. A new report cites six top reasons companies turn to managed services, with cost ranking all the way down the list at number four.

According to Warren H. Williams, Vice President and Senior Program Director of IntelliCom Analytics -- a market research firm focusing on managed services, outsourcing, and other technologies -- cost was a big factor several years ago. Today's list of motivations, however, looks like this:

● Improved overall network performance
● Increased network reliability
● Increased network availability
● Reduced operations cost
● Improved network quality of service
● Reduced business risk

Cost Superseded by Convergence
Cost is still important, certainly, but Williams' research over the last three years reveals a growing shift in priorities. "The corporate network has become a strategic resource; the Internet is a vital part of marketing, investor relations, customer satisfaction, and employee access to information," he writes. "Networking complexity and security requirements have increased exponentially."

This equates to nothing less than a multi-threaded convergence. On the one hand, there's the convergence of communications capabilities, such as data, voice, and video. On the other hand, there's the convergence of the network as the platform for a multitude of business processes.

Combating Complexity
Williams envisions these issues coming together "on a single infrastructure, with the objective ... of facilitating communication between man-to-man, man-to-machine, and machine-to-machine regardless of the endpoint." The end result? A flexible infrastructure that can support changing business conditions. Coupled with this capability, however, he says, is an "ever-increasing complexity, increased performance and reliability expectations, and increased costs for skilled personnel and management platforms."

Thus, the shift in motivation from cost reduction to network performance improvement. When considering managed services, then, you should look at the widest set of advantages possible: not just cost reduction, or the avoidance of high-priced personnel, but the advantage that comes from the ability to bring more flexibility and agility to your business.

Eight Options for Managed Security Services

In the online network connected business environment, security is more critical -- and also more complex. Today, network security requires constant monitoring and management. All businesses now experience vulnerability on an infrastructure that often extends to many locations.

Managed service providers can create a comprehensive security offering that enables you to maintain the level of protection and control you require. They can manage some or all of your network security functions -- giving you access to their dedicated manpower, 24-hour safeguarding, as well as routine maintenance and management of disaster recovery.

Finding the right security solution for your organization begins with establishing your priorities and becoming informed about alternatives. The following describes typical managed security service offerings, and how you can apply them.

Managed Firewall
Firewalls protect internal and external networks by restricting the types of network protocols and traffic allowed on your network. Firewall appliances, which the service provider manages remotely, include dedicated hardware and software platforms located on your premises.

Managed Distributed Denial-of-Service Protection
This service involves protecting the network infrastructure and network-based resources from distributed denial-of-service (DDoS) attacks -- so that your business can operate without interruption. It also helps prevent worm propagation that can cause DDoS attacks. DDoS mitigation provides protection against emerging threats.

Managed Intrusion Prevention Systems
Intrusion prevention systems (IPSs) identify and stop inappropriate attempts to access your network, systems, services, applications, or data. Intrusion detection services (IDSs) rely on network-based or host-based monitors, and often match monitored traffic or activity against profiles of known attacks.

Managed Antivirus Protection
This service most often involves checking for viruses at the gateway or firewall as well as in your e-mail messages, attachments, and file transfers. The service often includes automatic updates to antivirus definition files.

Managed Endpoint Protection
This service detects and stops unusual behavior on your endpoint devices, such as desktops and servers. In this way, you can prevent damage from Day-Zero security threats whose signature has not yet been identified.

Managed Authentication
Authentication refers to a group of processes and technologies used to verify the identity of a user attempting to gain access to your systems or applications.

Managed Content Filtering
Filtering is used to isolate and block content deemed inappropriate according to your internal policies or regulatory policies.

Vulnerability Assessment
The service includes security risk assessments, network scanning, and probing to reveal vulnerabilities in your network, operating system, or applications that can be accessed from the public Internet.

Contact a managed service provider, to learn more about these security capabilities, and the associated cost savings or productivity benefits. Most providers will have customer case studies for your consideration.

Six Options for Managed IP Communications

Many traditional businesses maintain separate networks for data and voice communication. With a converged voice-and-data network, companies can often reduce costs and gain significant productivity benefits.

However, the cost of implementing and managing the solution internally can be prohibitive. A more affordable option is to out-task IP communications to a managed services provider. This arrangement avoids initial CapEx and provides economies of scale -- because the service provider already owns the required infrastructure.

You can choose from several options for managed IP communications services. The following describes typical managed IP communications service offerings, and how you can apply them.

Business IP Telephony Services
This includes both subscriber and group calling services. Companies that need sophisticated PBX features can use a managed IP telephony service. Many small businesses can also receive the functionality that they require with a managed IP telephony solution.

Site-to-Site Voice
This service is really useful for companies with several branch offices that communicate regularly. A site-to-site voice service enables you to call from one site to another using the service provider's voice-over-IP (VoIP) infrastructure, avoiding long-distance toll costs. You can maintain a private dial plan, including support for simple 4-digit dialing.

Public Switched Telephone Network Access
Access to the traditional public switched telephone network (PSTN) can be enabled centrally over the service provider's network. Central PSTN access provides economies of scale, which, in turn, help reduce your costs.

Unified Messaging
These capabilities enable you to retrieve and respond to voice, fax, and e-mail messages from any phone or PC within your organization. Your team can check any type of message from the same inbox -- either the voicemail box, accessed from a phone, or the e-mail inbox, accessed from a computer. Rules-based call routing and speech recognition can further enhance usage for you, and your callers.

Voice over VPN
This service can reduce toll charges for your telecommuters and mobile team members. Using an IP phone from home, or SoftPhone software on your laptop during travel, you can easily make voice calls over the same, secure Virtual Private Network connection that's used to access data network applications.

Other Enhanced Services
You can also increase productivity by delivering new applications and information directly to your team's IP phones. As part of a managed IP telephony service, providers can provide customized Extensible Markup Language (XML) applications -- for example, to access team calendar information or read news stories relevant to your business.

Contact a managed service provider, to learn more about these IP communication capabilities, and the associated cost savings or productivity benefits. Most providers will have customer case studies for your consideration.

Can Managed Services Rescue Financial Services?

Turmoil and struggles in the financial services sector are splashed daily on the front page of newspapers around the world. The industry faces a number of monumental challenges that are threatening and shaping its future. To remain competitive, forward-looking firms need to:

• Reduce costs
• Improve cross-sell and up-sell results from existing customers
• Shift capital expenditures to operational expenditures through variable costing and on-demand capabilities
  

Progressive companies in the financial services sector are aggressively using managed services technology to address some of these current challenges.

Serving Market Growth
The financial services sector currently spends more than 2.5 times more on technology than other industries. The way they can attack challenge number one is to shift the management of desktops, data centers, and call centers to a managed services model. Companies are using this option not just to reduce costs, but as a way to reallocate investment into growth initiatives.

One regional U.S. bank came to Cisco ISBG (the company's strategic consulting arm), wanting to quickly enter a new niche market faster than a competitor and increase its market share. Its tactic: deploy an end-to-end managed service, including both technology and business processes.

The economics of managed services lower the barriers of entry to niche markets that might not have been economical before; it also helps them determine success or failure more quickly, and act accordingly.

Managed Services Increase Customer Ties
In developing markets, companies are looking to use managed services to target customers who might not have used banks at all previously. A managed service that offers the underlying network infrastructure, including phones, provides them with an on-demand and scalable service that they can roll-out ahead of competitors.

To increase the amount of business conducted with customers, financial services firms are looking beyond the traditional world of financial transactions and services. One large bank we're working with wants to expand its relationship with its small and mid-size customers by providing them with essential services as payroll, procurement, and human resources.

Because the bank wants to roll out these services quickly, they will be created, delivered and managed by another entity through a managed services model.

Next generation managed services offer a real opportunity to transform the financial services sector. But success will require creative thinking, as well as both the development of strategic partnerships with managed services providers and proper governance models.

About the author: Stuart Taylor is a Director in Cisco IBSG. Stuart leads thought leadership and engagements with key Service Providers in managed services. He has over 15 years of experience focused on strategy, corporate development, business unit strategy, M&A and operational improvement with large mobile and wireline operators and high technology clients.

Retailers Upbeat About TelePresence Applications

Companies with extended supply chains frequently need to collaborate with multiple partners -- simultaneously and visually. Yesterday at the National Retail Federation Conference in New York, AT&T and Cisco reminded attendees that they have added multipoint capabilities to their telepresence offering, which AT&T delivers as a managed service.

Attendees visiting AT&T's booth participated in videoconferencing discussions with Cisco employees in San Jose, and expressed confidence that they could apply the teleconferencing capabilities in their business immediately. Collin Cupid of high-end handbags and accessories manufacturer Coach said, "It made you feel like everybody's in the same room."

Sally Curtis of Planet Retail, a market research firm, said, "We can use this in our own context for communicating with customers. It's absolutely real." A couple of executives from United Rentals wanted an installation "yesterday," but were willing to settle for getting the equipment from the show floor. "Can we take that one right now?" asked Michael Ellis.

According to the companies, the AT&T Telepresence Solution works over the AT&T Virtual Private Network transport and provides:

• AT&T-owned Cisco TelePresence equipment
• Visual experience with the simplicity of a phone call
• Installation, monitoring and management of the application
• On-site equipment maintenance and repair, plus remote support
  
• Ability to handle complex, multinational, inter-company communications
• Security and reliability, as well as reduced IT staff requirements and limited impact on existing network applications
• Reduced exposure to technological obsolescence, reduced upfront capital expenditure
  

Global companies with extended supply chains can use telepresence to improve communications and accelerate time-to-market. They can also apply the visual medium to transcend cross-cultural communication hurdles, and thereby improve the speed of decision-making and overall operational efficiency.

Progressive Business Technology Adoption Trends

Business leaders are still upbeat about the benefits of technology adoption. It's key to their market penetration, central to competitive differentiation, and vital to their supply chain and distribution strategies.

However, according to Forrester Research, they are less than satisfied with their own IT organization's contributions. In fact, reducing the cost of operations is believed to be one of the few attributes where expectations are aligned.

Members of the Forrester Leadership Boards (FLB) CIO Group recently discussed this challenge. Forrester presented results from their business technology survey of 600 executive leaders.

The study uncovered the following significant gaps:

IT teams rarely are aligned around key business priorities. When asked to rank business drivers by their importance to the firm's technology strategies, business executives identified customers, productivity, and costs as the most important themes.

But, when asked to rate their IT organization effectiveness, there was a wide gap between critical business drivers and the perception of IT's focus -- even in the key areas of cost reduction and workforce productivity.

Business executives consider several sourcing alternatives to fulfill the IT requirements of their enterprise. When asked to rate sources of technology solutions, leaders continue to rank their IT organization as a primary source.

However, they also referred to a wide range of other viable sources -- from their own staff, consulting firms, as well as out-tasked subscription-based managed service offerings.

Proven Strategies for Success
CIO Group members noted that these survey results accurately reflect the overall situation for IT organizations today -- an unfortunate scenario where many CIOs typically spend considerable effort.

These CIO Group members have adopted best practices for IT-business alignment ahead of the general population. Almost all have dedicated relationship managers, as opposed to only 37 percent of surveyed IT organization. All have a PMO dedicated to IT governance, whereas only 47 percent of the typical firms do.

Proven strategies to integrate business and IT include: formalizing IT's role in the overall planning process; formalize, embed, and expand the role of relationship managers; embed IT skills within business organizations; create centers of excellence for business change skills; and, separate business enablement functions from IT delivery and operations.

End of the Do-it-Yourself Era
Forrester concludes, the era where IT said "we can do it all for you" is no longer viable. Business executives see IT inflexibility as a detriment to their agility. They're aware that internal IT is but one of many options.

Therefore, CIOs who insist that their role is the "sole source for technology solutions" will be marginalized. The savvy IT managers have embraced a coexistence scenario, where selective out-tasking is a welcomed addition to their solution portfolio.

Making Sure The Numbers Favor Managed Services

As industry analyst forecasts mount predicting the rapid growth of managed services, an increasing proportion of IT and business decision-makers are taking a closer look at how these alternatives can impact their operations.

The challenge is effectively measuring the costs and benefits of these options.

Gartner kicked off 2008 predicting, "By 2011, early technology adopters will forgo capital expenditures and instead purchase 40 per cent of their IT infrastructure as a service." And with today's unprecedented economy crisis, THINKstrategies believes the shift to managed services will be faster and more pronounced than predicted.

As a consequence, every responsible IT and business decision-maker is obligated to carefully reassess their current operations and thoroughly evaluate all of the available alternatives to better manage their IT environments so they can better support their business objectives.

Substantive Cost Comparisons
However, many of the current methods for evaluating the financial impact of today's managed services fall short because they don't effectively measure the full cost implications and additional business benefits of these services.

For instance, many managed service providers (MSPs) utilize web-based total cost of ownership (TCO) or return on investment (ROI) calculators to help potential customers understand the cost-savings they can generate using managed services.

Yet, these calculators often include generic cost comparisons which are irrelevant or of little value to specific companies. Or, they suggest that managed services can eliminate valuable staff positions which raises fears among potential customers that they will lose their jobs by hiring a MSP.

Comprehensive Assessments
What thoughtful IT and business decision-makers need instead are interactive tools which enable them to work with MSPs to more thoroughly measure the real cost-savings and additional business benefits -- both tangible and intangible -- that managed services can produce for their organization.

This requires more sophisticated calculators and skilled salespeople who can work with customers in utilizing these tools effectively.

Is Cash Flow Holding Your Technology Back?

At first glance, some small businesses are caught in a technology paradox: They need modern technologies to drive revenue higher. But they don't have enough cash to acquire that technology.

A recent American Express survey found that more than half of today's U.S. small business owners are experiencing cash flow problems, reports StartupSpark.com. As a result, the top priority for most small businesses is maintaining current sources of revenue -- rather than building new ones.

Have Your Cake and Eat it Too
I say: Why not pursue both goals? Fact is, you don't need very deep pockets to leverage modern technology. What you really need is a predictable cost structure -- a way to know exactly how you're going to continue innovating without suffering from surprise IT costs.

By now, you likely know where I'm heading: Predictable managed services contracts can help many of those worried small business owners get a handle on their IT costs.

Our company, for instance, pays a flat monthly fee for e-newsletter marketing services from StreamSend.com. We use that service to launch new products, promote news or evangelize special offers to new target customers.

We're also learning to cut the hidden costs of business travel. One prime example: We used to pay hotel WiFi fees, which varied greatly from region to region. But now we're paying a flat monthly fee for Starbucks WiFi service, which is readily available in all the cities we visit. Also, we're thinking of shifting again, this time to a cellular Internet connections for our laptops.

Cash Flow Management Solutions
Those are pretty basic steps. But don't stop there. Look at every piece of your IT infrastructure -- applications, hardware, systems, etc., and determine if there's a managed alternative available for a predictable monthly fee.

Then communicate and innovate with minimal impact on your monthly cash flow.

Managing Enterprise IT Operations, from Afar

According to a recent McKinsey & Company report, their research results demonstrated that the potential for managing servers and other IT resources remotely is essentially underutilized.

However, changes in the current business environment will increase the adoption of this approach. Plato, a wise Greek philosopher, wrote about how "necessity is the mother of invention." Certainly, that perspective is equally valid today.

The motivation for utilizing the resources of a service provider can be considerable. A case in point: Fortune 50 companies, with budgets of $2 billion, can save as much as $500 million of their IT infrastructure budgets.

How, you may ask? Apparently, it's mostly from reducing fully-loaded labor costs.

Evaluation of IT Assets and Liabilities
McKinsey surveyed 141 CIOs at multinational corporations, and 34 percent of them said that they anticipate utilizing some infrastructure management services over the next three years -- which is an increase from 19 percent of respondents in a similar survey performed during the prior year.

Economic justification is the basis for the expected growth. As hardware costs fall, labor has become the focal point. They estimate that costs for non-labor IT components -- the hardware, software, maintenance, and facilities -- declined by almost 44 percent between 2000 and 2008 as prices have dropped.

McKinsey also estimates that total costs will fall by nearly half from 2000 to 2010, however the labor component will more than double -- to 62 percent, from 30 percent.

Apparently, the attraction of a managed service solution is due to changes in the deployment of infrastructure. Many organizations have simplified their IT and network architecture, making it easier to decouple components, and utilize service providers.

Selectively Out-tasking the Drudgery
Besides, standardization has made some management tasks ready for automation. As a result, it is now easier to manage some complex IT tasks, like network security monitoring, from a remote location.

Furthermore, organizations can selectively out-task parts of their IT infrastructure management. Some companies will choose to only out-task network monitoring, while others seek assistance with the total management of their data center needs. Clearly, it's a flexible model that can adapt to shifting business requirements.

In summary, McKinsey believes that the greater speed and security of data networking has made interactions between the service user and their provider more stable. This progress has therefore increased acceptance of the managed service delivery model.

By the way, before you rush to reduce your Business Technology deployment plans, you may also want to reflect upon McKinsey's guidance on IT spending cuts: they believe that "IT investments deliver more value to a company's top and bottom lines -- by creating new efficiencies and increasing revenues -- than any savings gained from traditional IT cost cutting."