Author Expert: Martha Young

Martha Young

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Business, Assets, Profitability and Diminishing Returns

By Martha Young on Mon, 10/27/08 - 7:16pm.

Green businesses tend to inherently support virtual business processes. Teleworkers reduce commuting emissions. Taking advantage of hosted, managed, or outsourced services tend to reduce a firm's physical infrastructure requirements thereby reducing power draws and cooling requirements. Utilizing thin clients coupled with software as a service eliminates a company's server farms, the power consumption and the internal toxic chemicals used on the servers' as well as computers' boards. Yet there are so many other ways in which companies can practice environmental stewardship and reap higher profits as well as a sustainable competitive advantage. If this is true, then why aren't more companies moving in a virtual and green direction?

The reason companies aren’t jumping on the virtual and green bandwagons boils down to existing technology investments. The return on investments have not been fully realized, so firms tend to stick with what they have in place and continue to squeeze value out of the assets. However, at some point they will hit a point of diminishing returns.

Take, for example, the PBX marketplace. Companies continue to keep these behemoths because of the massive investment they have made over the years. However, one vendor's PBX and message store does not easily integrate with another. The maintenance contracts border on extortion and the move to software license bundles is a way to hide failed telephony initiatives by forcing them onto uninterested customers. Some concessions have been made by the propriety PBX vendors to front end their equipment to make them somewhat compatible with voice over IP, but the telephony features are still provided by the PBX, are still proprietary in nature, and still lack interoperability at any reasonable level of meaningfulness with VoIP solutions. So what will it take to get companies away from lock-in solutions? Here’s one idea.

Now, with the financial markets in turmoil and firms needing to take a hard look at every single expense is a perfect time to engage in a project prioritization initiative. Look at every single telephony and network expense and map it to a matrix that compares organizational impact against ease of implementation-adoption. Only those projects that fall in the upper right quadrant of high impact and easy to implement should be executed. All other projects need to either be tabled or turned over to a service provider that can do it faster and cheaper.

As you look at the projects that should move forward, one thing will become clear, all of these programs hinge on IP. It may be a mobility initiative, a collaboration project or an application mash up. Whatever it is, it has its foundation in IP. If this is true, then why make any further investments in a proprietary PBX? The company has reached a point of diminishing returns and should focus all further technology investments in migrating to IP. I am not advocating a rip-and-replace solution. I suggest a measured migration. Start by moving whole departments or groups that can best take advantage of emerging technologies today. Teams that spend the bulk of their time communicating and collaborating would better be served by an IP solution, allowing anytime, anywhere, any device access.

There is no rational reason for keeping old technology limping along. The advantages of moving to an IP-based infrastructure are too great, opening the door for your firm to take advantage of many of the cost savings associated with virtualization and working in the cloud. When the economy gets back on track, those firms that focused on restructuring the business-enabling technologies rather than headcount reductions in their efforts for cost reductions will be substantially further ahead than their competitors. This is a huge competitive advantage and the mark of great, visionary leadership.

This week I am covering two green conferences. For information on either conference go here http://www.naturallyboulderproducts.com/days/program-and-events.html and here www.cleanenergyforum.com. If you have specific questions you would like addressed in my one-on-one interviews with the venture capitalists or the company executives at these conferences, drop me a note. I’ll make every effort to get them addressed.