published Friday, January 28th, 2011

Blue-collar companies adopt white-collar technology

When Tommy Sisk first decided to upgrade the information technology infrastructure at T.S. Raulston, a Chattanooga-based mechanical contractor, he said he just "hodgepodged it together as best as we could do."

That was before he discovered cloud computing -- a method of storing data on servers maintained by a third party through the Internet.

Cloud computing represents the evolution of IT toward software as a service, instead of a department within each company.

"We don't have the luxury of IT people on staff," Sisk said, so he contracted through Chattanooga-based SurfN Development to host the company's servers, adding a bundle of 21st century capabilities in the process.

The biggest addition was bleeding-edge geo-tracking software that maps out where each of the company's tools is at all times. Lost or misplaced tools were costing the company thousands of dollars, but geo-tracking has cut down on tool costs by up to 15 percent, Sisk said.

His experience is part of a citywide push to outsource expensive IT functions to more efficient and experienced third-party vendors, who can remotely and securely maintain and upgrade a client's back-office capabilities, according to Alan Field, head of SurfN Development Corp.

"Tommy's 10 to 15 percent savings on tool management is pretty typical," Field said. "It's a very modest cost with a great deal of gain, compared to someone with an in-house IT department."

Economies of scale help Field and others like him spread the cost of upgrades and new technology around among many clients, instead of the "old way" that saw large financial burdens placed on individual companies by their IT departments each time an upgrade was called for, Field said.

"When you're managing things, whether its vans, tools or promises to customers, when its automated I'd say you'll see at least 10 to 15 percent savings," he said.

OTHERS HOP ON BOARD

Even companies that appear low-tech to outsiders are upgrading their back-office capabilities in anticipation of a coming economic resurgence, Field said.

Chattanooga-based Reliable Heating and Air Conditioning now has "computers in every van with the repair history of each customer and GPS tracking, and a database of every part we have," said service manager David Walker.

"Our whole operating system for our work is Alan Field," he added.

Checking out the cloud

2000s -- The cloud emerges:

* Users became increasingly connected both to each other and to their information through applications like Facebook and Google Docs.

* More information was stored and accessed over the Internet through third-party server farms, or "the cloud," thanks to readily available and speedy Internet connections.

* The need for PC software and increasingly sophisticated hardware abated somewhat, as more applications and data were simply accessed through a browser window, existing only "in the cloud" instead of locally on a user's PC.

2010s -- Cloud software as a service:

* With much of the world's data existing in warehouses filled with servers instead of on individual PCs, information technology companies are moving toward selling software as a service over the Internet, instead of selling it on a disc in a retail store.

* Companies simply sell access to software that consumers may access through an Internet browser. The user doesn't need to install, maintain or upgrade the software, since it exists in "the cloud," but instead pays a fee to the company for use of the program.

* Economies of scale help the software hosts to more easily push out upgrades and fixes to all users at once, though the importance of a reliable connection to the Internet grows exponentially.

Source: SurfN Development Corp

Through wireless technology and offsite hosting, managers can send job updates to laptops in each service van, and customers receive instant price quotes and information from special printers technicians carry with them, Walker said.

GPS tracking also helps with disappearing parts and the problem of workers doing side work with company equipment, he said.

"We've saved $600 per week, and I've reduced the amount of parts I buy by 25 percent," Walker said.

One employee was fired when the software caught him improperly using company parts in a company van.

"Now they're not out doing side work on the weekends with my parts," he said.

The heads of small companies typically "wear a lot of hats," said Blake Young, president of Applied Thermal Systems, often taking on the role of accountant, CEO and IT guy all rolled into one.

"When someone had trouble with Microsoft Outlook, that's something I had to do, I had to help them," Young said. "Now I don't have to do it anymore."

Now all the company's software runs in Internet browser windows, accessed remotely through an Internet connection to Field's downtown offices.

E-mail contacts and calendars are shared through Android phones, meaning that "You can put out fires at work without having to drive to the office," Young said. "It takes less time to do the same things, which can lead to being able to do more business in any given day."

Sexton Construction, a Chattanooga-area general contractor, runs accounting, e-mail and most importantly, plan distribution, through Field's systems, according to owner Jerry Sexton.

"We have all the packages and plans uploaded to our website, so subcontractors can go into that, download the plans and packages at their offices, and submit a bid from our website," Sexton said.

The arrangement saves time and money spent printing out copy after copy of expensive architectural drawings, and repeating the process every time plans change, he said.

Bids, change notifications and more are handled through mass e-mail, which provides an electronic record of interactions and is faster and more efficient than other methods, Sexton added.

"If I could typically manage three projects by myself, I can now manage four projects, it's so tremendous," he said. "It takes the guesswork out of who does what, and saves everybody money and time."

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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jpo3136 said...

They are also adopting white-collar business vulnerabilities. By placing significant assets in another holding company's custody, it will harder for investors to determine the genuine equity of a company. That includes allowing the company owners themselves to realize what they have.

While cloud computing is a good method for backup or mirroring, providing another company with exclusive data holding and control is like borrowing your neighbor's cash register. What business would want to keep their books running through the cash drawers of the retailer next door? With cloud computing, businesses face similar risks.

The companies offering data services have a financial incentive to take control. Yet, who will help the customer in the event of a catastrophic failure, holding company buyout, or some unforseen problem?

While there is nothing inherently wrong with purchasing services like data holding and cloud computing, putting all of one's eggs in another's basket is just as dangerous with cloud computing as it might be with any other business asset. Where's the risk assessments that could protect consumers? Also, where's the protection from signing a contract that could be catastrophic to the data holding company? In other words, if these agreements are like insurance, would they hold up under the basic standards for contracting an insurance policy? Among better companies, offering sound and stable services, they would.

Yet, it seems in those cases the better service for cloud computing companies to offer would include some type of hardware mirroring or backup always in the possession of the subscriber's company. This way, if a customer becomes disaffected, or just plain wants to keep his own data, he can because he already would.

Cloud computing is a good idea, but sound investments in it would carry characteristics similar to other banking or insurance agreements. That includes not putting all of your company's eggs in one basket; and, it includes keeping a copy of everything for yourself.

A good business would have two bookkeepers checking each other, wouldn't they? Well, why not cultivate such a safeguard in data storage and computer services? Most of the time, it's dirt cheap for a business to maintain a copy of the week's records for themselves. A simple archiving plan could insulate local companies from a great deal of future heartache. With a weekly copy, customers and cloud service providers alike have some limits on the potential impact of unforseen future problems.

January 28, 2011 at 5:11 p.m.
EdwardMurrow said...

Good points JPO,

I do feel cloud moves beyond data storage/mirroring. Its more about control of material. "PC's" are a nightmare, ask anyone who is still using one instead of the phone they have. On demand desktops, applications, and the idea of flash terminals replacing pc's is whats so inviting. Need to update 200 pc's from XP to 7?

Thats a breeze now.

January 28, 2011 at 5:43 p.m.
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