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Summary:

Precise’s Zohar Gilad explains how his company shaved more than $2 million from its annual IT budget by migrating its IT infrastructure and applications to the cloud.

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I’m not the first to jump on the latest technology. Even after working in high-tech for more than 20 years, I am still a late adopter. But if you can prove to me that a new technology will save me or my company money, I’ll make the switch in an instant.

In 2008 the company I work for, Precise (a developer of application performance management systems), was spun out of its parent company Symantec and into a private company. Suddenly, we had 1,000 customers to support, and a limited IT department. Symantec offered to sell us licenses for SAP and other enterprise software packages that we had been using. But in our new structure, we needed applications that were scaled down and easier to support. We ditched the world of licensed software and annual commitments to large capital expenses on equipment — the traditional way of doing IT — in favor of cloud, SaaS and virtualization.

As a midsize company with more than 200 employees, it was a tectonic shift. But after a year-long migration of our IT infrastructure and applications to the cloud, we shaved more than $2 million, or 70 percent, from our annual IT budget. Here’s how we did it.

Our first priority was to find a solution to support our customers, so we chose Salesforce and NetSuite for the front and back-office solutions. It took a single data analyst a mere five hours to migrate all of our data from SAP to the new systems. For customer support, we chose Drupal and for marketing we chose Marketo — both of which were seamlessly integrated using WebSphere Cast Iron Cloud Integration.

Next up, we had to deal with the Microsoft Exchange servers that we’d inherited from Symantec. Microsoft Exchange can be a bear to support with a slim staff, so we opted for Google Mail instead. The e-mail migration took about five days, and later we also moved from Microsoft SharePoint to Google Sites for collaboration. The cool thing is, employees don’t have to do everything on Google. They can still access their favorite Microsoft Office applications, such as Excel, or use Outlook front-end if they wish.

We also went through a major server virtualization project in engineering — chopping off about 60 percent of our server expenses — and switched to AT&T fiber for networking and adopted VoIP for telephony.

None of the technologies that I’ve mentioned are new or even groundbreaking. But the fact that we could adopt all of them in a short period of time, integrate them using a single data analyst and realize such financial benefits is astounding. Even five years ago, small and midsize companies couldn’t afford state-of-the-art technologies to run their businesses. That’s all changed — and the playing field for IT sophistication has leveled out.

Not only is using newer, Web technologies more affordable, but they’re also more reliable. That’s been the case at Precise, at least. We haven’t had any issues from moving to a SaaS environment. We didn’t spend a bunch of money on hordes of consultants to get everything in place. It really was that simple. I give credit to our former IT director, Sharon Cohen, for choosing the right strategy and the right partners — that’s key.

Our transition to the cloud means that today we spend less time managing all the plumbing and more time working on our own products. We’re even looking at deploying cloud-based systems for R & D. And let’s not forget, we are saving more than $2 million per year. That’s the kind of money companies of our size, which comprise the bulk of the U.S. economy, can really put to good use. We can use those savings to hire strategic new employees or bring new features and services to our customers. For midsize companies, there’s no doubt:  rip out your on-premise software apps, go SaaS and adopt the cloud across the board.

Zohar Gilad is the executive vice president at Precise, a developer of application performance management systems. Before joining Precise, Zohar held senior executive positions at Mercury Interactive, which was acquired by HP in 2006.  

Image courtesy of Flickr user AndyFitz.

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  1. This is like listening to a conversation at a bar.
    Where’s the objective evaluation of functionality? Comparison of products across the market.

    If a company is using SharePoint isn’t it easier to migrate to Office365 – which is SharePoint in the cloud? And Exchange in the cloud? Google’s offerings are hardly functionally equivalent.

    1. office 365 is also functionally different to current Office experience

      1. You are incorrect, Cloud Assist. Office 365 functionality has 905 of the functionality of office on prem, and as far as using exhcnage online, it is nearly 99% equivilant, at a fraction of the cost of on-prem without the need for exchange admins.

    2. George Kwabenah Appiah Joe Wood Wednesday, February 22, 2012

      Office365 maybe the natural cloud path to someone using SharePoint, but ask yourself what percentage of SharePoint’s and Office’s floated features do you REALLY use? The writer may simply have found Google Sites’s limited features be enough for their use case.

    3. Brett (computer repair expert) Joe Wood Saturday, February 25, 2012

      Agreed. There are serious limitations with gmail over an Exchange system. This is not to say you can’t use gmail in the interests of objectivity they should have atleast been mentioned. You might like to check our article Exchange v Gmail at http://www.newtonsnerds.com .

  2. I noticed that not much information was given about the server virtualization, and I’d be interested in hearing more about that. Thanks

  3. Wait – so in this case, the cloud is cheaper than self hosting?

  4. Hello Zohar, this is an interesting read that I am sure I will share with some of my prospects! Thank you taking time to share.

  5. “It took a single data analyst a mere five hours to migrate all of our data from SAP to the new systems.”

    That might be true for DATA TRANSFER ONLY but don’t give me that about converting a whole CRM system from one to another. 5 days? Get real. Most companies take the opportunity when switching to new platforms to change things significantly.

    As for the rest of the stuff – this is not practical everywhere. You act as if the switch to Gmail is nothing because “people can still use Outlook.”

    Hate to break this to you, but making the change from one system to another is the easy part in any IT environment —- making sure all the users understand what the heck is going on and how to adapt is a whole other story.

    1. Anonymous Coward Scott Friday, February 24, 2012

      So essentially you’re saying that a shift from self-hosted to cloud is requiring a shift in corporate culture, right? I thought this is obvious!

      You may have also overlooked the fact that they spent a year not just doing the migration but also using the new systems. They should’ve observed potential problems by now, I think.

  6. @zohargilad love your post! thanks for sharing the message – all SMB owners and enterprise IT managers can benefit by moving IT to the cloud, we’ve realized similar savings using @salesforce @netsuite and our own cloud phone systems @ringcentral – curious if you’ve moved your business phones to the cloud as well? more cost savings to be realized from that by ridding your offices of on-premise phone tech such as PBXs which are archaic and obsolete.

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  9. We’ve used SugarCRM (1/3 of the cost of SalesForce) with Google Mail and collaboration tools. A similar story — but even lower cost. But it’s not just cost it’s also complexity that gets reduced. Google tools are not only easier to deploy – they are easier to use.

  10. :) As someone who sells Microsoft’s software as a service (pay per use per month), I couldn’ resist informing the world: One could do a similar exercise without building a patch work of apps based on multiple platforms. SharePoint, Lync/Skype, Exchange, CRM and a range of open source as well as commercial apps built by ISV’s that seamlessly integrate with Office ARE AVAILABLE today via an ecosystem of hosters worldwide.

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