Recently I watched Saturday Night Live lampoon the government for not being able to rapidly catch and control the wild oscillations of the economy. The opening monolog asked for people to phone in and offer suggestions to understand what is going on – the Treasury Secretary had no clue.

So here’s my solution.

The economy until the late 1970s was a dull softball. It was properly muted with oversized regulation that prevented big business (Fannie/Freddie) and conglomerates (AIG) from bouncing the economy wildly and hitting it out of the park…the game continued, but it was not very exciting.

Then economists, bankers and regulators began to forget the wisdom of depression era thinkers, who took a long time to control that economy with regulation, and decided to re-engineer the ball and take away the softening effects of SEC Regulation for Utilities, Banks, Securities Traders and Mortgages. They invented the economic equivalent of the “Super ball.” It out-performed the Softball economy and it gave everyone some excitement.

Excitement that is, until that kid showed up! You know that kid, the one that could not contain himself as he grabbed the super ball economy and slammed it down with more force than anyone had before. Now the ball bounces wildly and everywhere. No one can catch it. Each time it hit a hard surface and we think we can catch the carom, we miss. You see, the super ball has a very sticky surface and the spin applied before the impact has unpredictable effects on the direction of each bounce.

So this is our economy now. A global economy that was supercharged and uncontrollable by the single brute (global governments and super-sized corporations) who allowed this to happen.

So what is the solution?

If we wait long enough, the wild oscillations of this economy will be dampened. Most probably at the cost of breaking the fine china on the credenza, the fresh cut flowers on the table, and shattering the picture window. Not a suitable outcome.

If we are to dampen the effects of this out-of-control economic super ball quickly, the solution is the same as it was when we were kids; we have to all act together, circle the area around the ball as it bounces at us, and together we deftly smother and individually bat it down reflexively with the soft hands of a skilled receiver.

To smother the oscillation of this economy quickly, it is now up to the millions of small business owners, employers and tax payers. We are the band that will form the circle around this economy to be the shock absorbers of the incessant effects of the wild oscillations and use our soft hands to catch as much as we can of the energy that needs to be taken out of this supercharged event. How?

1. By stretching out our ability to hold jobs an extra week or month.
2. Making sure we’re able to pay everyone we owe, perhaps a little at a time, but we do not ignore anyone.
3. By continuing to invest in good ideas to be ready to emerge stronger.

The long term fix is for the governments to replace the super ball economy with the properly regulated softball game. That will take time.

The short fix is in our hands, but only if we all act responsibly and universally. Think globally, act locally.

John Boyd

“It’s the ECONOMY stupid!”

James Carville wrote the above message on the whiteboard where the then candidate, Bill Clinton, would see it every day before he went out on the stump to campaign for office. The point of this exercise? Bill would get wrapped up in talking about whatever came to his mind each day and lose focus on the real issues. This daily reminder was meant to help reel him in.

It’s even more important today for each business to stay focused on the real issue—It’s the Economy!

We at Fandotech are no different than any other small business and we have to stay focused on the fundamentals: cash flow. Cash flow is the equivalent to a loan for us. If we deliver a service to a customer this week and pay our people this week, but our customer doesn’t pay for 90 days, we have to borrow money to cover the difference in time. If everyone delayed payments for 90 days we’re missing a quarter of annual revenues.

MSP businesses cannot assume the liability of being the bank for the clients. Therefore we need to put both incentives and penalties into contracts to insure timely collections for our valuable services.

When clients pay ahead, we can entice them with a point or two of discount.

When they delay, we must be business-like and disciplined; ready to enforce the late fees and collection fees. Every time we compromise on these when a client is excessively late in paying us, we are losing money and devaluing our services in the client’s eyes.

Even in tough times, good clients value our service enough to want us to be their MSP next year. BUT if we don’t manage cash flow this year, your MSP may be the one to provide the service next year.

John Boyd

I am sure many of you are looking at strategies to reduce costs and run your businesses efficiently as we get ready for what looks to be a tough year economically in 2009. At Fandotech, the management team has been reviewing our expenses in an attempt to do more with less and keep our team employed in 2009.  Unfortunately, during conversations with some of my clients, layoffs at their companies are inevitable. 

The challenge they are facing is that they still need to move the business forward with technology playing a key supporting role.

So what are some options?

• Reduce Capital Costs: One area that many clients expressed as a concern for this year involved how to support the growth of technology as their capital budgets are being slashed. A Hardware as a Service (360IT ) platform can get a company the technology they need to grow, while eliminating the capital expenditure. Hardware is provided to a client for a specified term (usually 3 years) and the equipment is delivered configured for your environment and fully warrantied for the term. Most providers wrap services into the offering to support the service and eliminate the need for internal support.

Hardware as a Service keeps the assets off of your balance sheet, property tax belongs to the provider, and is billed much like any other utility that a customer might consume. At the same time you can add the new technology assets (Servers, PC’s, Networking) that you need to meet the demands of your business.

• Lower operational costs: At Fandotech we have been looking at ways to reduce our monthly expenses. One strategy that we are deploying leverages Virtualized technologies. Server virtualization gives us the ability to run multiple servers on a single server asset. On our internal network, we are consolidating approximately 20 servers onto 3 servers (and one shared storage device).

We had conducted an energy study prior to moving our infrastructure to the virtual environment and estimated that we will save between $50-$70 monthly per server in energy costs (power and cooling). This translates to a minimum annual savings of $10,200! Additionally, the reduction in physical servers reduces support overhead and future hardware costs. But enough about money, what is the technology benefit?  If you need a new server for a new corporate initiative, you generally only need a copy of Windows to get the project started.

• Fix your costs:A budgeted monthly support model can provide a company with more than a predictable cost model for IT support. Many IT firms implement security tools to reduce the risk of a security breach or unexpected failure in the client environment as an insurance policy against many threats, and to reduce on-site support costs. Customers should also leverage this type of arrangement to include some level of consulting (here at Fandotech we regularly visit our clients to understand their business and to map technology to their business goals).

The strategies above can help organizations cut costs, not service, during this weak economic period without sacrificing the IT tools needed to sustain their business.

Good Luck in 2009!

Brian Doyle