Technology investment

Investment in IT has traditionally been driven by specific business strategies, with systems designed to meet pre-defined business objectives. However, continual advances mean that technology itself can now create business opportunities. To reap the greatest rewards from technology, managements sometimes need to look at what technology can do and consider not only the existing business model, but also how utilising technology can open new markets. By Jim Greenfield of PKF.

The most obvious example of where technology is driving business processes is online trading. With online purchases expected to reach £78 billion by 2010, a market which didn’t even exist a few years ago is soon to account for 20% of all consumer spending.

By utilising technology, companies can expand their markets and reach new customers. For example, a manufacturer or importer traditionally working in a wholesale environment would previously have found it too expensive to develop a direct sales model because of the costs of employing a sales force and supporting it with marketing campaigns. But by utilising online sales they may be able to open new markets using existing supply chain and fulfilment processes to generate new revenue streams for a relatively low investment and on-going cost.

Similarly, mobility and advances in communications are having a profound impact on business effectiveness. Whether it is relocating a call centre to Asia or the ability for a salesman to check stock levels and produce accurate quotations from the customer’s living room, technology can enable you to use the most appropriate people in the most suitable location to the greatest advantage.

To be best placed to take advantage of technology, you need both secure foundations on which to build and also the flexibility to adopt and adapt as markets and technical fads change. Solid core systems and reliable processes need to be married to the ability and willingness to change. The introduction of personal computers in the 1980s led to decentralisation of technology and, while it brought flexibility at a local level, it also made the management of one of a company’s main assets – its data – far more difficult. This also meant that it was difficult to change and embrace new opportunities, as every single desktop needed updating.

For PKF, a national firm of accountants and business advisers, providing IT services to 1,800 staff in 23 regional offices used to be expensive, with much duplication of effort and resources. However, the firm has pursued a policy of convergence and centralisation of all aspects of IT which has both simplified the administration of the systems and provided real commercial benefit to the business.

The firm used to run IT independently in each office, with each location having its own servers and networks. This presented many problems, including:

• variances in quality between different offices (particularly between large and small)
• the difficulty and cost of providing effective support
• lack of flexibility for the users
• concerns over security and standards, speed of roll-out and implementation, and
• lack of effective disaster recovery.

Several architectures were considered in the quest for improved performance. The primary requirement was to provide the same wide variety of Windows-based systems to a multitude of locations, while allowing central changes to be available to regional users as quickly as possible. As the network of regional offices performs similar functions while providing service to clients in their locality, the requirements of most offices were very similar, if not identical. Although most of this initial thinking was based around data, the voice and telecoms requirements echoed those of data very closely.

The solution utilises Terminal Services and Citrix to provide a ‘Thin Client’ architecture, with a central data centre providing applications, database servers, web and email facilities, and central data storage.

Thin Client systems use central servers to run all applications, with the local computer on a desk reduced to the functionality of a terminal, simply sending keystrokes and mouse movements to the servers, and receiving screen images back.

The cost justification for centralisation can be complex, for savings in local infrastructure are at least partly offset by a need to invest in reliable communications. The real benefits only come from complete adoption of the technology and the removal of the previous infrastructure. This is where many companies fail to derive benefit as they use Thin Client technologies to deliver one or two specific applications while maintaining a traditional infrastructure for the remainder. This simply doubles costs and often leads to under-investment to the detriment of the quality of the service provided.

For PKF, its MPLS-based network from BT provides ‘quality of service’ guarantees and classes of service to ensure that the bandwidth is utilised in the most effective manner. As a result, voice and data traffic can share the same network.

For telephony, a full ‘Voice over IP’ (VOIP) system was selected from Avaya, principally because of the excellent functionality that the survivable units can provide in local offices should communication to the central system fail. Each office retains its own telephone lines, although the network mesh means that a failure in any part of the country can immediately be covered by the facilities in other locations.

Running Thin Client data and VOIP on the same network presents some challenges, but careful planning and control will result in a very flexible and efficient system. The fact that both are centrally located and managed with a minimum of distributed equipment makes the management and control far easier and more effective than in a distributed system, and this directly benefits security and reliability.

This strategy has many benefits for PKF. From an IT perspective, the systems are far more reliable, consistent, secure and easier to manage. Resource for general support has been halved, although there has been investment in higher skills for the roles involved in managing the data centre. Flexibility of the infrastructure is also important, as new offices can be set up or old offices amalgamated with ease and with minimal additional expenditure. Disaster recovery is important for every company, too, and having one infrastructure to replicate has enormous advantages as it is easier to replicate one system than 23.

For the user, the systems have transformed working methods. Partners and staff can now work from home, any PKF or client office, or any internet-enabled location. When moving between offices, they can sit at any desk and, once logged on to the telephone and computer, have all their own voice facilities with full access to all their applications and data. For mobile working, a reliable internet connection such as home broadband allows access to whatever applications and data are required, although comprehensive security ensures that data is only accessed by those who need it.

Systems are more reliable, and any issues can be investigated instantly by the central support group. Most important, location and the type of computer or terminal used have no effect on the quality of service provided, which enables staff in the smallest offices to receive exactly the same service as those in their larger counterparts.

New applications and processes can be introduced quickly and reliably. With all existing data in one location, integration with existing systems is easily accomplished. Any problems and faults are also easier to replicate (as everyone works from the same base equipment) and, as a result, are more likely to be resolved, with the resolutions provided to everyone, thus again leading to more reliable systems.

Best of all for any business, the systems are cost- effective. While a substantial investment is required for the initial implementation, the cost savings over a traditional infrastructure have resulted in lower long- term costs for PKF, with greater flexibility, more facilities and more reliable systems.

For the future, the firm is looking to developments in mobile technology which will provide even greater freedom to the users. The prospect of new wireless technologies such as WiMax being available across the country will benefit any organisation where staff regularly travel to clients’ offices or work in a multitude of locations. Adoption of this and many other new technologies will be easier for those who have embraced converged networks and who have addressed the security and operational concerns that they raise.

Jim Greenfield is IT Director, PKF Accountants and business advisers. Contact christiane.morris[at]uk.pkf.com

The articles published here in the Thinking CEO are internet updates of the latest management knowledge and practice, which have been commissioned by Sovereign Publications for their bi-annual magazine, CEO Today, and will appear later in the first 2007 issue of this publication. To contact Sovereign and CEO Today, go to:

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