Am I spending too much? Are we behind the times and too slow? These are often questions that Avèro hears from its clients regarding Information Technology (IT) within their organizations. Today, IT modernization means so many things to many different people. In this conversation, Mike Caffrey and Abhijit Verekar share their thoughts on proven roadmaps, pitfalls to look for, and spend traps to avoid when it comes to IT modernization. It’s easy to throw money at IT without seeing anything in return. However, utilizing a consulting partner to assist in revealing or validating your organization’s concerns can save you from years of spending and inefficiency.

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IT Modernization: Proven Roadmaps And Pitfalls To Avoid

Hello and welcome to another episode of Rethink IT. I’m here with Mike Caffrey. We’re going to talk about something we’re passionate about together. We have been yacking about this for many years, but it’s never been documented. If you’re hearing this, consider yourself blessed.

Also, consider this might be a little disorganized. It’s not like we’re coming at this with a script.

It’s proven, and there’s much to talk about what this has done for other clients. It needs to be documented for future generations. What I wanted to talk about in general is IT modernization because it means many different things for many people. We have a proven roadmap for what that should mean and the pitfalls to watch for. Specifically, we should discuss the spend traps. It’s easy to throw money at IT without seeing anything in return.

I don’t know that there’s a roadmap. There is a proven process. When you look at our folks in the field when they first reach a client, it’s using a proven process for extracting the information that the client’s going to need to make better decisions. Many times, it’s not IT that invited us in. It’s a different department, most likely on the financial side of the house, the mayor’s office, and an executive. When you go in there, they want to know what’s going on in their shop. I suspect they already know. They’re looking for validation. “I think I’m spending too much; I’m behind the times, things run too slow. I hear the next county does things better,” whatever they’re saying or thinking, they’re asking us to come in and reveal answers or confirm.

The other thing, too, is when we respond to RFPs, it’s written in a certain way. Sometimes confusing or straightforward. Many times, when we get on the ground and start doing the work, what they want to do is not what they asked for in the RFP. The problem description is a problem in itself. This is convoluted and confusing. If you build up layers upon layers of bad decisions, it ends up being confusing.

We’ve talked about this from many angles. What is it they say, “When all you have is a hammer, every problem is a nail?” When you look at our competition, it oftentimes does not have a 360-degree view. They’re unable to not just approach the customer with answers but find a mutually satisfactory relationship here, especially in rural areas. If a sales guy pops in from name a vendor and he’s not able to paint a picture for you or a solution without mentioning the brand, you got a problem. As much as we love our vendor partners here at Avèro, I know for a fact that our strength, our secret sauce, is in our ability to look at the solutions before we bring in the brand or a partner to the table. I would be highly suspicious of the guy that came in here from whatever brand saying they’ve got the thing for me. You can’t have? What are the odds of that?

The thing is commoditized now, right? What is the thing?

If you’re sitting at home and a guy shows up at your door and says, “I sell Ford trucks. You need a Ford truck. Every problem you have, I can solve with the Ford truck.” You’d be suspicious of that because the commodity is four wheels and an engine. Is it always a truck? Is it always a Ford? No. The solution might be, “I only go to the store once a week. Show me where the bus stop or a carpool is.” I don’t necessarily need a $350 a month payment plus gas and insurance to do the weekly thing. What our folks bring to the table is the ability to look around, see what’s out there, and provide an effective solution that isn’t necessarily tied to the purchase of new stuff or choices.

Our client tends to be an organization or a leader that suspects things aren’t working the way they should in 2020. They maybe have found some money through the CARES Act or some other resource and says, “Now is the time for me to spend this money on IT, bring us into the 20th century, and look better in terms of our peers.” More often than not, it is spent on buying servers and racks. The guy or the woman writing the check has no idea what’s being bought. What do you think is the right approach in that situation where you know you need to spend? Where do you start?

Before you spend the money, my thinking is you should invest at least some of that money upfront in the planning phase. Just because you have it and there’s a deadline, it doesn’t mean that you can’t spend some of your time on some effective planning. That might involve bringing in a technical resource to the table. Somebody that you’ve not met or perhaps even uncomfortable with because they’re speaking in a different language. How many times have we walked into a new client and part of discovery with walking around, visiting, meeting people for the first time, going into their computer room, or into one of their network closets, and seeing stuff in boxes that has been there for months?

 

My thinking is if that was my own stuff and I’d spent that much money on anything at home personally, somebody in my home would be questioning my sanity, but I hadn’t at least gotten that out of the box yet. This is what we see. Take it a little bit more subtle. You can always tell when there’s not an open box, meaning hardware. You cannot always tell that it’s software. Software happens much more frequently where the customer has already purchased a recommended software product. They either haven’t implemented it fully, or many times, they don’t even know what the software does, not in its completeness.

They know that here are the two features I know I need. They don’t know there are 38 other features that came bundled in. I find that many times, as soon as the sale is done, the guy or the company that sold it to you, they’re gone. They’re off to the next deal. Whereas what our folks do is they’re there with you, by your side, commiserating with you enough to know that some of this stuff isn’t done until it’s complete. It’s not complete when the box arrives. It’s complete when you’re happy with the solution you bought.

You’re right. Buying the solution isn’t the end of the problem. When people spend money without a plan, that’s when the spending trap opens up. You don’t have a plan, you bought the first shiny thing that came along, and now it’s sitting in boxes in your warehouse. Your problems still exist. You’ve spent the money. If we were to roll back to that client, and you could slap the purchasing agent on the wrist and said, “Don’t cut that PO because we need to talk.”

We’ve had those relationships. We know there have been purchasing agents out there that have called you and me and asked us to give them a thumbnail sketch. Is this a good thing or a bad thing? Clearly, we’re going to give them the best advice we can, but you’re right. What would we do if we could turn back time and say, “Hold on a second before you sign that purchase order, let’s talk?” Sometimes, that’s such a lengthy process asking that. You see this defeated look in their eyes that, “I went through an RFP. Do you know how painful that was? We went through interviews. Do you know how painful that was? Now you, Mr. I’m-your-friend guy, shows up and says, ‘Give me a few more minutes. I’m thinking some of this stuff over the course of five years costs that organization hundreds of thousands of dollars.’” Isn’t it worth another 30 minutes and 24 hours to take another look at it?

We’re on the same page because before the RFP goes out, you have to have a plan documented and know exactly what you’re going to get in that box when it shows up. What are some of the few things that tend to be spending traps when people are taking on modernization at first?

You’ve seen a lot more RFPs than I have. I’m allergic to them. When you see those, and you see in there a technical description, not a business problem presented. That raises a red flag to me. In many cases, some of these RFPs are written for a particular vendor with a particular solution in mind. Somebody has already got to the customer and is sold them on the concept that, “If you buy the thing and competitively bid me out when we win, you will see how wonderful we are.” It’s too late at that point, but you can tell when you read the RFP, are you interested in solving a business problem, or are you just interested in wanting a thing?

The biggest trap is that because that’s the gift that keeps on giving. If you are comfortable enough spending that money, and I’m talking not tens of thousands, but consider the fact that over the life of a product, five years plus, 20% a year is going to go to maintenance and support. If I spent $100,000 on the thing and I got one year of support built-in, I should budget 20% for every year that follows for maintenance and support for that one solution. Over the course of five years, I’ve spent $180,000 on the thing that I thought was only $100,000.

Many times that isn’t factored into the cost of the decision. Your spend trap is seen $100,000, one with five zeros, without seeing that it’s $180,000. Software is a silent killer there because often, you will have software in your organization. When our guys come onsite, and we’ll do a scan with whatever IT resources you have, we’ll even do it in conjunction with a purchasing agent or with somebody in accounting to look at what’s your inventory and what have you purchased over the last couple of years that you need to maintain.

We’ll find stuff that they didn’t know they had, but what’s worse is they have kept paying the bill to support that product for the last several years. How many times where you’ve seen that the customer had a recurring monthly bill or a software product like Scribe, or maybe it’s a cloud solution, but they’ve been paying for it for years. Maybe they even stopped using it years ago, but because the guy in accounting that pays those bills sees it every month or every year, he keeps paying the bill.

We ran into a solution. All we’re trying to do is help the customer reduce the number of phone bills in their organization. We could not convince the person paying the bill to stop paying the bill because that’s the only way to sever the service. We go over there. We visit with him, you and I face-to-face, and we’re like, “Stop paying the dang bills.” He was looking at it, “You don’t know. If I stop paying the bill, the phones might not work.” “Trust us. The phones will work. You’re on a new phone system. You’ve been on a new phone system for six months.” These things happen. I wish I could say we’re making it up, but the spend trap begins when you signed the PO.

Don’t spend without prior planning. Focus on the problem that you want to solve, not on wanting to acquire a particular product. Share on X

It also sounds like it’s not the big-ticket items. The spend trap isn’t the big one. It’s the trickle. It’s $500 for the phone, or someone is using an off-brand PDF thing that costs $2 a month. Those are not just spend traps. They’re also efficiency traps because your IT team doesn’t know what’s going on.

That’s a better way to quantify it, an efficiency trap. When a sales guy comes in, and he says, “You can get this solution with one year support and maintenance, but I will give you a discount if you give me a five-year support and maintenance contract.” The efficiency that you’ve lost there is the ability to swivel if things change five years or sometime during the next five years. You are bound to that contract, and that’s unfortunate. Was the savings worth the lack of flexibility you’ve now created for yourself? Some of these organizations and many of them don’t have any reliable IT support. They don’t have full-time guys dedicated to IT, or maybe the IT guys they have aren’t into being IT guys. They’re more desktop support guys.

When your support is a vendor from out-of-town or perhaps even out-of-state, you’re not always getting the best information. This has been an awful year but what COVID has done is it’s forced us to create relationships in a remote setting, in a way that none of us are comfortable with, but let’s face it, we have to be able to do it. Our preference is to visit with our clients face-to-face. I still believe that to my core, but now that we’re all forced to do it over the phone and video conference and create and maintain a relationship. It has also put us in a position to get a little bit better at how we do discovery and how we collect information. Also, how do you tell that the guy on the other side of the phone, whether it’s a vendor or reseller, isn’t giving you information that serves your best interest?

What else do you have?

When I look at things that get people to move in the direction of a spend trap, because I read the trade magazines too, on the technical side in particular. Whoever is writing the article, what they’re trying to do is to put provocative statements out there. In the same way where if you were watching TV, whether you’re overweight or not, if you watch all the commercials, we are all overweight. We all need a machine, diet, cleanse, or whatever it is. They are selling it on TV. The trades are no different.

If you listen to what they are telling you with their collateral, they are telling you, “Compare yourself to an IT benchmark.” If you’re not spending a percent of your total budget on IT, you’re not performing adequately, or you’re spending way too much. If we were to do a cost analysis for your shop or organization, 10% is too much to spend on IT things. I don’t think that those benchmarks apply the smaller the organization gets. Those benchmarks are great when you’ve got organizations with 2,000, 20,000, 200,000 people in them. When you’re talking about an organization with 100 people in it, when you’re talking about a total budget every year of $50 million or $100 million, those numbers don’t mean as much.

Those smaller organizations spend money differently. Their cost structure is different, and there’s no way to quantify. If you were at Gartner, for example, and you’re pushing the data out that you’d be able to say, “For county governments at $20 million or less, here’s what your benchmark should be.” There are not enough data points out there to give you an effective measure. Unfortunately, people read those things, and they think, “I am as bad as I think I am. I need to push some buttons. Let me call my buddy next door. He seems to know a lot about IT. Let me find out what his organization did when they had problems with their ERP system.” That’s how you’re going to determine your next spend? And, your commitment to an ERP is 2 years or 20 years. Some of these guys have been around for twenty years in the same ERP system. I’m going to go off of a guy that I see a couple of times a year. When it’s more, it’s long.

It’s a once in a lifetime thing for most people. It’s once in a career thing. Interesting point, we spoke to a large unnamed pension association. The ask was that we become consultants to the board, not to the organization. I don’t know what these CIOs, CTO is wanting to buy. I’ll Google this. I don’t understand the analysis. The board chair was telling me, “Can you guys become our consultants for the long haul so we can run it by you.” In many ways, that is what we do.

Those are our best relationships. They’re not looking for us to necessarily be the implementer, although we’re good at that. They’re looking for advice and counsel from the variety of customers that we have. People sometimes don’t understand that spending more on a particular product or function does not necessarily mean it’s better. Because of how little you’re going to use it, it means you want to spend more.

It goes back to the analogy of building a house. You’re not just going to go buy the most expensive windows and say, “Thumbs up, checkoff, windows are done. Let’s go buy some doors.” When you don’t have an architectural plan, you would never do that.

 

When I’m living off the grid, that is exactly what I’m doing. You’re right. First, you need to plan, architect, and design the thing that you’re shooting for.

You need to think about things like which direction you want to look. Do you want a house on a hill or valley? Do you want it in a cold spot or a hot spot? All of those things, the vision needs to be developed before you go, and then you do the plan, buy stuff, implement, make sure it works, then you keep up with it. There is a proven roadmap. It’s a stepping stone methodology. We didn’t create it. It’s the industry.

When it comes to decision-making in that respect, it brings up an interesting point. ABC software is out there. They claim to be the best in their space for ERP systems. DEF software is out there, and they’ve got a piece of collateral that shows here’s all the things that ABC software doesn’t do that we do. That does not necessarily mean that ABC software is bad for you. The relationships that I like the best is we’re providing advice and counsel in that particular situation because we can help the client see that of the twenty features that ABC software provides, the most important ones, according to you is number 3, 17, and 20.

Are those strengths against the DEF software? If they’re not, then we should weight for this decision a little bit different than doing a straight across the board my 20 features beat 15 of some of the other company’s features. Even more so, during implementation is where some of the best advice falls out. You’re looking at the software product side-by-side. You might have reached a decision as to which one you want, but when you bring an experienced team in there to provide you their best advice on how these implementations have gone right and wrong, that is the most meaningful use of my spend as a customer.

Sometimes, even more than the cost of the software itself, because what I’m going to hear from AV is that when we saw this implemented three times before with an organization of similar size, they had a key person in the finance department that decided they didn’t want to do it this way. To make that successful, we had to do it that way. Mr. Customer, is that the direction you want to go? If you’ve got the stomach for it, we’re right behind you. If your feeling is, I don’t want to deal with stressing that relationship or that is not the way I would choose to do it either, then we can help you there, but that is not going to come up in an RFP, in the side-by-side sales collateral type, or even in a POC.

It’s about conversations. The thing about being stuck to a decision is not sticky anymore because of SaaS and Vendor Alliance and how good some of these vendors are with support. If you are stuck with a decision that was made 30 years ago, it’s relatively easy to get out. Maybe not 30 years ago because then you’re talking about AS/400.

A great example is when we were talking to a client about voice over IP phones. It’s going from a traditional PBX-based phone system. I don’t know how many departments they had, and each department had its own peculiarities on how their PBX system worked. It was a bear getting everything into a voice over IP system that was affordable for them. To your point, once we got them in and we have all the documentation that came from that implementation, everything about that system became portable. We have all the documentation by the department and what makes those departments happy.

If you decided, “I don’t like that vendor anymore. Let’s shop this year and go to vendor X over there because I’ve heard their pricing is better. We can take all of our requirements by the department, ship it over to vendor X and say, ‘Can you meet, match or exceed any of these features?’” If they say yes, here’s somebody to competitively bid my next voice over IP system. You’ve made it portable by investing the time upfront to make everyone happy. A lot of SaaS products come with that caveat. There are built-in features, then there are the customizations, but we had to document it all along the way.

That’s when we lock arms with our customers through that implementation, to help them avoid the pitfalls of the implementation but also to make sure that documentation is all there. If you want to change your ERP systems, I wouldn’t recommend doing that every five years, but if something happens that you needed to get off that system, you’ve got documentation to assist you in a more portable version of that system that they never had.

It’s not so much customization as it is configuration because those systems are built so robust. It’s about your CIS admin making the right checkmarks.

Spending more on a particular IT product or function does not necessarily mean that it's better. Share on X

The customization sticks in my mind because what you hear from the sales guy is, “My stuff works with their stuff. I’ve already got an API for that,” but then what you find out is it only works there in certain situations like on Thursday nights with a full moon while you’re rolling downhill. It doesn’t work any other time of the year. That’s when you have to customize something that we were told did not need customization. You’re right. If everyone is true to their word, if every dark corner is lit before you make that purchase, these should be configuration choices, not customization choices. Our recommendation always is to minimize the amount of customization that goes into any of these implementations.

What else is a spend trap?

There are many of them, but here’s the one that bothers me the most. It’s not a spend trap. It’s a cost savings trap. That is, I need to save money, and I decided that I don’t need maintenance on my hardware or my software any longer. I can do it myself. For homes, people rarely buy maintenance on their car, although for the first 4 or 5 years of ownership, it comes built-in maybe. If it wasn’t for that, very few of us would say, “I need to spend X amount of money or 20% of the cost of my car to maintain my car every year.” Applying that logic to systems that the expectation every day is that system is up and works. Not that at 90%, but it is optimal at 100% every day, like a utility. You’re expecting like when I walk into a room, flip the switch on and think, “It didn’t come on. That’s okay. I only expect it to come on 90% of the time.” Do you ever think that when it comes to electricity or water?

Not in the US.

That’s true. Not in this country, but when it comes to all of those things necessary to run your organization, you got to believe that everyone expects that to be up 100% of the time. Cost savings is not dropping support. If the support has become so burdensome, perhaps you have the wrong solution. There are ways to get a cheaper product. Maybe it is time to trade it out for something less expensive that comes with fewer bells and whistles. That’s something you can afford so it can have a better chance of uptime.

How many times when we go in to visit with an organization about modernization do we look across the table, and we found out that the systems we’re trying to modernize are either broken or about to break when we start dismantling the structure? They haven’t been covered under support for years because somebody said, “That’s too much money to spend.” It makes our job more difficult because now we got to put things on life support systems to get them through a difficult and sometimes risky period, to get them into their new system. That’s not right.

Clearly, the phone call to us happened years too late, but that is oftentimes an easy target. There are a lot of other things that organizations will cut, but it won’t be people. It will be those things that I don’t see security. We haven’t had a security breach the whole time I’ve been here. Why are we paying for that? Software and hardware support, all of the things that while they are working, I can’t recall that they’ve ever been used. That’s the point. It is like insurance. The time you notice insurance is when you don’t have it.

There used to be bad customer service, and there still is, especially in specific industries like public housing. There’s a large 800-pound gorilla system that’s out there. Those housing authority software solutions suck at customer service and you’re supposed to rely on them. On the flip side, as we move to more hosted, more SaaS solutions, you expect that to be that level of support. That’s going to change. It’s either you better your customer service or someone’s going to take over your spot in the industry.

How about this? When you look at that solution, if you are that provider’s biggest customer, that is not a good position to be in. If you’re a small organization, say you’ve got less than 1,000 users, trust me, you do not have the ear of the vendor. The large organizations do. In my mind, if I look at uptime as one of my success factors and I’m nowhere close to being their biggest customer, they’ve got a lot of other people to make happy before they get to me. If all I’m doing is riding on that biggest customer’s coattails, that should be good enough for me as well. What we find is the guy that tells the best story is the one that oftentimes wins.

Unfortunately, for small and medium-sized government, they’re seduced into hearing a feature story that has a wonderful ending to it. Everyone lives happily forever and all this other good stuff, then the sales guy is gone. That’s when the real pain begins. They need to know when they’re making these purchases, the difference between being one of few customers or being one of many customers, and what the benefits they can do. To your point, SaaS products or solutions have come down dramatically in price over the years. Things that weren’t available to many organizations are now available at a fraction of the price. You can have the best of the breed without having to pay the best of breed prices any longer.

It’s important to know that uptime is determined by those great, huge customers. It shouldn’t be determined by you. Anyone reading this blog, if you’re the one thinking that my business is driving that multibillion-dollar organization software uptime report and the success of their organization, you’re sadly mistaken. It’s funny. We’re slightly tangential to that topic. You said it in another meeting that we were at because the spend was going to go to whoever was in the Gartner’s Magic Quadrant. As if I don’t need to do any more research. You see where this vendor lands in the quadrant.

 

That’s what we started talking about. We were laughing about it. Sadly, that’s how we’re going to make decisions because there isn’t a trade magazine out there where you can tell the difference between an objective article and an ad. It’s sad in a state of where we’re at. If you’re on Facebook looking for facts about anything, you are in the wrong place. If you’re reading a newspaper thinking you’re seeing anything better than editorial, you’re in the wrong place. The same way with trade magazines.

There’s an angle on every story you read. If you can’t see past the angle, then ask us. We’ll help you see past the angle. I don’t get paid for the product. I don’t work for IBM any longer. We make recommendations on the solutions based on the success of some of our other customers, and we will vouch it as such. Customer X over there, they’re doing wonderful. You say you want to go with this software vendor. We can even get you on the phone with them, and you could hear about the downside as well as the upsides. Nobody’s story is perfect. Magic Quadrant, that’s going to tell us where we need to spend our money or what’s worse, seeing my favorite vendor in that quadrant is what’s going to release the funds. That could be the worst way to spend your money.

There are many subtleties to what we talked about. We can go on and on about these things. The gist of what you shared is what you said in the beginning that if we don’t invest in planning, if we can’t define business needs before we get to technical descriptions, then you’re going to be lost. Your chance or your odds of success go way down. These oftentimes aren’t long conversations. You get an answer, and I do as well. Sometimes, it’s a random phone call from a friend of ours that happens to be in some department with a former client even saying, “We’re about to do the thing. What do you think of that?” My question would be, “What was your process? Did somebody help you through the planning part?”

As simple as, “What are you trying to solve?”

There you go. Always a good one. What is the problem you’re trying to solve? We have great relationships so we oftentimes know the problem that they’re trying to solve before they brought it to our attention. Where we’ve seen this IT spend go wrong often is there was somebody in the organization that saw something that they liked and thought that shiny thing needs to be brought to their organization because that’s how cool it is. I got a call from the head of an agency here in the State of Tennessee. They had seen a location where we spend a lot of time, and they’d seen a solution.

It’s like a touchscreen solution that had been around the building for public use like a kiosk type thing. Somehow, she got my name. She said, “I like how these kiosks are deployed. I heard you guys have a hand in IT over there. I’m wondering if you can help me deploy that solution here.” I thought she was joking. I said, “What is it that you liked?” She said, “They look cool. They’re touch screens. They’re colorful and slick. It looks modern.” I said, “What is the problem we’re trying to solve?” I got to tell you, for that particular solution, if we could turn the clock back, I would never do that again. Not the way that one was set up.

At some point, you end up halfway in and halfway out, and your decision is, do I push forward to finish what we’ve got? “Is it time to call it quits and spend more money to get the right solution in?” In that case, we made a decision to push forward and complete what we’d started. That doesn’t mean that’s the decision we’re going to replicate for everyone that asks. She could only describe the business need in terms of color, modern, slick-looking. Even the basic question is, are you going to use it as an interactive map for your customers? “No. This looks good.”

This was a good scratching the surface side of the conversation. We need to dig into some of the deeper concepts. Thanks for joining, and we’ll catch you on the next one.

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• Mike Caffrey

About Mike Caffrey

Mike Caffrey is the Vice President and Partner for Avèro Infrastructure with over 22 years of experience solving the puzzles of efficient, secure, and cost-friendly modernization for various public and private sector organizations. He is the recipient of InterCon 2019’s “Top 50 Tech Leaders” award for significant technology sector contributions. Also, Caffrey has been recognized by the following: National Top 50 Tech Advisors (2019), Small Business of the Year Blount County (2019), and Excellence and Innovation in Government Cyber Security (2020). His vast experience in Information Technology (IT) started as an IT Management Consultant and Senior Storage Specialist for International Business Machines (IBM) in 1998. Prior to becoming a Partner at Avèro, Caffrey was the President for Hosted Government Solutions and Chief Strategist for InfoSystems, Inc and other reputable IT organizations across the southeast. He has also been featured as a panelist with Dell (Virtual Courtrooms – 2020), GFOA (Government Finance Officers Annual Conference 2020), and Tyler Detect (Annual Conference 2020).

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