Playing Catch-Up

In some ways, midsize
businesses will be dealing
with the same general IT
issues in 2007 as their large
corporate cousins. They’ll be
trying to help the business
grow; watching the bottom
line; worrying about security;
and consolidating infrastructure.
A Gartner Inc. survey
of top IT initiatives in small
and medium-size businesses
for the coming year reveals
a priority list that would not
be foreign to a Fortune 500
company: security, disaster
recovery, Web development,
mobility, business intelligence
and so forth.

But smaller businesses prioritize
these to-do lists differently
than big companies do,
and because they are limited by
budget and staffing constraints,
they take vastly different
approaches to achieving their
goals. With that in mind, 2007
promises to be a busy year for
mid-market businesses, many
of which are playing catch-up
and employing creative IT workarounds
that bolster their systems
without breaking the bank.

Take disaster recovery, for
example, which just popped up
on the mid-market radar this
past year. The need for foolproof
backup is a given in major corporations,
which have legal and
fiduciary responsibilities to demonstrate
ironclad data-recovery
practices. But for smaller companies,
disaster recovery has been
a luxury that many could not
afford. Not anymore: On average,
midsize companies expect to
increase their spending on disaster
recovery next year by more
than 9 percent.

“The mid-market has horrible
backup practices,” says Jim
Browning, vice president of the
small and medium business
practice at Gartner.
Fortunately, the adoption of
virtualization technology is driving
a new “poor man’s disaster
recovery,” as Browning puts it.
Though the move to virtualization
is intended to save money
and computing resources by consolidating
servers, savvy business
owners are realizing the
fringe benefits. Many are taking
the servers that were freed up
through the virtualization process
and creating mini-disaster
recovery sites.

That’s exactly what George
Neill did as director of IT at
Organic Valley, a $340 million
organic-farming cooperative
based in LaFarge, Wis. “The
threats change from year to year,
but the thing that really keeps me
up at night is disaster recovery,”
Neill says. Organic Valley’s headquarters
is a two-hour drive from
Madison, the closest tech center
where Neill could get help if he
needed it. So Neill took matters
into his own hands. He says virtualizing
his server infrastructure
has given him the ability to
leverage his hardware for disaster
recovery and improve the company’s
ability to recover. “If one of
our servers went down, we literally
could bring up our virtualized
app servers on a PC,” says Neill.
Outsourcing is another tactic
that midsize businesses are
expected to begin embracing in
the coming year. Midsize businesses
have been slower than
big businesses to move IT services
outside the company. But
there is anecdotal evidence that
mid-market companies are coming
around on this issue. Already
39 percent of midsize companies
say they are willing to outsource
strategic functions.

“A lot of these guys have been
kicking the tires, but signing
very few actual contracts,” says Gartner’s Browning. “They’re
going to have no choice but to
outsource eventually, especially
infrastructure and security.”
Count Al Garcia among the
early converts. Garcia is vice president
of IT at Comac Inc., a $35
million marketing fulfillment services
provider in Milpitas, Calif.
The company, a division of Iron
Mountain Inc., has been growing
rapidly over the past few years,
and Garcia needed to offload
some of the more basic IT work
so his team could concentrate on
supporting the growth. Two years
ago he outsourced his “back end
and warehouse management system,
stuff that no one else wants
to do,” says Garcia.

In making the decision, Garcia
had the same concerns that
most mid-market companies
have when they look at outsourcing.
He was concerned that his
company would be too small to
be important to a big service provider,
and he would get substandard
service. “We wanted their
A-team,” he says. He ruled out
offshoring early, because the
overseas providers were too difficult
to manage and, the way he
saw it, would end up costing just
as much as a local provider. And
he needed a team he could meet
with regularly to engage in “agile
programming,” a method of software
development that involves
many iterations and constant reevaluating
of a project.

Ultimately, Garcia went with
a small Chicago outfit called The
Refactory, a group of five software
development specialists. Through
the contract, Garcia feels as if he
added five people to his IT staff of
nine. “We’re working on the guts
of the warehouse management
system and we need to have
these guys close at hand,” says
Garcia. “I fly them in at least once
a month, sometimes more.”
Garcia’s other big concern is
data security, a growing problem
that is starting to affect businesses
of all sizes. In the past,
smaller companies didn’t have
to worry as much about being
attacked by hackers, who were
more interested in taking down
large corporate networks for
bragging rights. But today the
schemes are more organized and
sophisticated, and the bad guys
are looking to steal personal data
wherever they can find it. Everyone
is a target.

Garcia says his clients—in
industries as varied as pharmaceuticals,
automotive supplies
and corporate staffing—are
increasingly concerned about
the security of customer data
which they must turn over to
Comac as part of doing business.
And Comac is responding with
increased protection. Among
other things, the company is
bolstering physical security
around its facilities, and spending
time training employees on
policies and procedures.
Another technology that is
slowly making its way into the
mid-market is business intelligence.
While larger companies
have been implementing BI software
for years, reaping the benefits
of targeted data mining and
analysis, the big corporate software
suites were just too expensive
for more modest businesses.
But Microsoft Corp. is changing
all that.

“The small and medium-size
businesses are realizing they
have pockets of data and they
want something that can discover
it, clean it up, and create
reports and dashboards,”
says Gartner’s Browning. “And
Microsoft is driving the awareness
around this, coming out
with good enough and affordable
BI products.” Microsoft sells
a BI product called ProClarity,
which it acquired in April 2006.
Cognos Inc., Hyperion Solutions
Corp. and SAS Institute Inc. all
compete with Microsoft in the

Indeed, 2007 will be a busy
year for midsize companies. It’s
an uphill climb, but for those
businesses that achieve the summit,
the reward is a whole new
set of concerns: those of a billiondollar

CIO Insight Staff
CIO Insight Staff
CIO Insight offers thought leadership and best practices in the IT security and management industry while providing expert recommendations on software solutions for IT leaders. It is the trusted resource for security professionals who need network monitoring technology and solutions to maintain regulatory compliance for their teams and organizations.

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