3 Ways to De-risk Your Venture Capital Investment

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Written by Daniel Tautges – @danieltautges

CEO @Pinpoint Worldwide

In my previous blog You know your business is in trouble when.. Capital Not Available , I outlined how investors loose (by raw number of investments) more than they win.  A good investor can loose seven out of ten investments and still be wildly successful.   Are there ways for an investor to de-risk their investment?  Common fails?  The answer is absolutely yes, please read on to learn how.

Having been involved with so many early stage, venture backed, technology companies and often being recruited to turn-around a failing investment, I have seen several fails that could have been avoided with a little deeper, unbiased, due diligence.  The three most common fails are a bit more psychological and a little less analytical and include the investor falling in love with:  the founder; the sales model; or the market vertical.

In Love with the Founder

Firstly, I consider myself an entrepreneur, founder, business exec, etc. so when I say that when the investor falls in love with the founder it can be a bad thing, it is a little unnerving.  I mean they should absolutely fall in love with the founder as they are their business partner and need to have a trustful, mutually respectful, partnership in creating business value.  But… I have seen this backfire on several occasions where the faith of the investor in the founder was greater than the ability of the company (business opportunity, key-men, marketing plan, sales plan, product plan, resource needs, competition, etc.) to deliver.

I have directly asked investors “why did you invest three-rounds in this mess?”.  The reply, “well, he/she was successful in the past so it was worth the risk.”  I totally agree that track record is a good predictor of future success but without a more comprehensive understanding of the company, the investment for the love of the founder creates serious investment risk.  A deeper dive into the company would have easily predicted failure.

In Love with the Sales Model

Software and Technology have been my playground my entire career.  I have built, run, and executed global sales plans that were direct, distributed, VAR’d, OEM’d, on-premise, VPN’d, VM’d, SaaS’d, baked, fried, and sautéed.  So, I’ve had my fingers in pretty much every approach you can imagine.  When VC’s fall in love with the sales model, really bad things can happen.  The sales model is the result of the market, product, buying persona, adapted to how your customers buy, period.  I have worked with investors who didn’t always follow that rule.  They had a set strategy where they were chasing companies with the Sales Model they loved, i.e. they were looking for only SaaS businesses.  They rightfully saw how successful companies like Saleforce.com were and wanted a Salesforce.com like company with a stable/predicable revenue stream.  Ok, I completely get why that is very cool and it is pretty much the model for the software industry today but.. not all types of buyers (i.e. Banking, Gov) are willing to buy that way so fundamentally the model needs to reflect who you are selling to and adapt to the way the market buys.

Real-world story

I helped turn around a failing early stage company that had received investment from a well know Silicon Valley bank and one of the largest hedge fund investors on the planet.  The founder was loved by the investors and had sold them on the virtues of Software-as-a-Service.  He had created a wonderful financial model of reoccurring revenue and 100’s of thousands of users and how this company would be the next Salesforce.  The investors LOVED it.  Who wouldn’t?  When I got there, they had already spent the initial seed ($5M) and had very little to show for it.  I started digging-in, and began by interviewing potential buyers of the product.  The buying profile was mission critical operation with limited and high tech sophisticated users.  Not really the ideal model for SaaS but a really nice model to sell high ASP, enterprise-class, software.  Once I was able to execute a new business plan, the company had great results.  They closed 60 new logo’s and reached break-even cash flow in less than 18 months.  The product, market, buying persona drive the sales model; don’t fall in love with the model.  If the investors had had deeper knowledge of the buying persona and market requirements, they would not have make this mistake.

In Love with the Market Vertical

“We have to have a horse in the race.”  “This is a multi-billion dollar vertical in five years.”  “Gartner is building a quadrant.”  I have seen the promise of so many markets just not make it past the hype curve.  Sometimes it just was about timing and took a lot longer to get there or a bigger fish gobbled up the market opportunity.  Technology is a time sensitive business, always innovating, always changing.  It’s one of the main reasons I have made it my life’s passion.  But.. the wise investor evaluates their core domains for incredible opportunities regardless of vertical.  As one of my personal business mentors John Moores’ (founder of BMC Software & JMI) said, “we are always looking for the equivalent in software of a cure for cancer.”  Meaning, this is not a just a technology vertical (IoT, VR, Social) investment but investment in technology that is a new and innovative  solution to a critical problem.

Another story

I was an early leader in the development of software for the Data Center Infrastructure Market (DCIM).  Early on, the investment community was advised that this market would grow at 20% CAGR and would surpass $1B by 2018.  The venture community lined up to place their bets on horses in the race.  Money, early on, was fairly easy to raise, valuations were high, and companies took the funding and began to battle for DCIM market share.  The DCIM software market floundered for many reasons (a later blog) and the well for money dried up leaving a wake of companies with not enough money to execute, some with just enough to stay in business, and others to just close up shop.  The investment community was burnt with a love of the market but if they had dug a little deeper they would have seen how badly the analyst community had overestimated the market opportunity.

Great investors don’t fall for fails based on the love of the founder, the love of the sales model, or the love of the market.  Great investors dig deeper and gather unbiased due diligence on the company and the marketplace.  Investing in a company that portends to have a “cure for cancer” is a huge challenge for investors and gaining as much ground-level intelligence can make the difference in winning big or a major loss.

To learn more about Pinpoint Worldwide and how we solve global company growth problems, please visit http://www.pinpointworldwide.com or contact me at daniel@pinpointworldwide.com

You Know Your Business is Challenged When…Capital is Not Available

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Written by Daniel Tautges – @danieltautges

CEO Pinpoint Worldwide

Running and advising global businesses for most of my adult life, I have found that there are common problems that most face in reaching their growth and revenue goals.  In this post let’s take a look at the dreaded Capital is Not Available”.

I’ve had the opportunity to work with some of the largest Venture Capital and Private Equity firms in the World.  I have both looked at deals as a VC as well as raising capital as an early stage business.  This experience has given me a unique understanding on how to put your company in the best position to engage the venture community, raise capital at a fair valuation, and make capital available to your company when needed.

Although it is true that bootstrapping a “life-style” business is a great way to prosperity, most entrepreneurs that I work with are looking to change the world.  If you want to change the world, continue reading…

I’ve met with several entrepreneurs who had been turned down when trying to raise capital when they had the opportunity to pitch their business to investors.   They are in a tough spot, stuck without the necessary capital to aggressively grow their business.  In the Tech business, slow and steady rarely wins the race.  When you have a great market opportunity, as they say in Rome, Carpe diem.   With billions is capital available in the market, why were they turned down?  Often the investor will tell you “their reason” but “their reason” is not always a hard rule but generally more of a guideline.  “So you’re telling me there’s a chance..”  Absolutely.

When discussing investment opportunities, several entrepreneurs have shared the following feedback with me after they presented to a venture firm:

“We only invest in break-even companies with $3M in trailing revenue”

“You don’t have enough customers”

“The executive team is too inexperienced”

“The valuation is un-realistic”

In reality, I have been involved with funding rounds where all of these blockers existed and the company still was able to raise capital at a favorable rate.  How were they able to raise but you were not?  Please read on.

They have a methodology that the investment team follows that has (if they are good) worked three out of ten times.   They know they are going to miss on most but they have to hit big on a few, so there are guidelines but not rules.  They know the risk.  Not all the horses will win the race but a few have to.  Realize that at one point Facebook, Apple, eBay, etc. were all turned down for capital (BVP Anti-portfolio).

So what when wrong?  Why was the company turned down for investment?  There are so many tangible and intangible factors, but there are a few deal killers that are controllable and a few that, frankly, aren’t.

Controllable Factors

Did you do your research on the firm?  Does the investor fund in and around the space?  Do they have a horse (competitive/or in-vertical) already in the race?  Was the information presented in a professional way with the right information? Do you have a relationship with the investor?  Is the CEO/Founder a winner?  Will the investment make a difference?  Is the market opportunity really as big as you think it is?

A large Venture firm will see a minimum of three firms just like yours, in your space, with your value prop, with your IP, so then why you?   A good venture partner of mine recommends that don’t loose out because you missed the basics.  Make sure that answers to the following 11 questions be clearly understood internally and presented externally in a professional way.

  • Why your company – elevator pitch?
  • What do you do?
  • Why do you do it?
  • Who will buy your prospects/customers?
  • Who is on the Team -what have they done?
  • Why are you better than the competition?
  • What is your secret sauce/IP?
  • How do you sell it?
  • How much money has been raised?  This round?  Future rounds?
  • Why invest?- Is there an Exit Strategy?
  • How are you going to use the money?

Uncontrollable

Fund Health.  It is not always easy to know the funds general health.  The fund might look large but most of the money is already allocated to existing companies.

Timing.  The fund is not ready to invest.

Working with the wrong associate.  The associate is not able to sell your deal above other deals in the queue.

Lost to market competitor.  Fund is evaluating several funding candidates in your space and you lost to internal domain knowledge, familiarity, lower perceived risk, higher upside, more favorable valuation.

You know your business is challenged when capital is unavailable.  Realize that if you want to raise money, you can control some of the key variables that can give you an advantage in the search.  Change the world.  Make sure that your company is in the best position to engage the venture community, raise capital at a fair valuation, and make growth capital available when you need it.

To learn more about Pinpoint Worldwide and how we solve global company growth problems, please visit http://www.pinpointworldwide.com or contact me at daniel@pinpointworldwide.com

You Know Your Business is Challenged When..Technology Misses Market

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Written by Daniel Tautges – @danieltautges

CEO Pinpoint Worldwide

Running and advising global businesses for most of my adult life, I have found that there are common problems that most face in reaching their growth and revenue goals.   In this post lets take a look at the dreaded our technology is great but doesn’t solve a problem.

When technology misses market, this is clearly a case of aim..fire..ready.   It happens a lot more than one might think.  The great thing about technologists they are usually complete geeks about the technology.  They get so lost in creating the perfect product they can loose site of the end customer.  Some are able to get away with this approach, Steve Jobs comes to mind, while others get stuck with a product that they are unable to sell.

A company that I worked with, shall remain nameless, had exactly this problem.  They had purchased some interesting software IP and got their initial funding round to sell their product as an add on to a Microsoft application.  When ready for market, they attempted to sell the product and found, shockingly, that no one was interested.  They had literally, no sales.  Where did they go wrong?  Millions invested, great technology, no revenue.  Clearly, their technology did not solve a problem.

How do you recover from falling off a cliff?  You need to climb back up the cliff.  This is where I was brought in to determine what happened and how to get back on track.

The first thing you need to do is quickly determine why the product was not selling and fundamentally what problem is it solving and for what persona.  Are we marketing to the right audience and are we generating ROI for their business.  After my review I quickly found out that the product was a perfect fit for really no market.  It was priced too expensively for the market it was trying to be sold into and did not have enough features to compete in a market that offered the greatest opportunity.

As part of the effort, I interviewed thirty prospects and met with thought leaders in the their vertical.   We completed a new business plan, market requirements plan and product plan.  We engaged early adopters who committed to buy the early prototypes, raised a small amount of additional capital and augmented the development team with insource/outsource resources.

The results were amazing.  In 18 months we were able to secure 60 new clients, top logos, get to cash flow breakeven, with $2M per quarter run rate.  Make sure your technology is great and solves a problem.

To learn more about Pinpoint Worldwide and how we solve problems, please visit http://www.pinpointworldwide.com or contact me at daniel@pinpointworldwide.com

 

 

 

 

 

Pinpoint Take: TRACKIT Mobile Unify’s Service Desk & DCIM at the Rack

The Pinpoint Worldwide Take is my review of current technology in the IT software, DCIM, and Infrastructure Management space.  This current take is my review of an independent software and services vendor that has a unique application that unify’s service desk with DCIM by leveraging a mobile UI that records, updates, prints, bar codes and audits while the technician is performing the work. This take is about TRACKIT Solutions, specifically the TRACKIT Moble App.

See Video on Pinpoint TV or read transcript below.

Hi this is Daniel Tautges with Pinpoint Worldwide. Thank you for joining me today. I’m excited to talk to you about a company that I’ve been working with the last few months in the software technology space. They’ve got a very cool product not a lot of people know about. In this video I’ll talk a little about what the product is and how it fits in the marketplace. The company is TRACKIT Solutions and TRACKIT has been around for about eight years but their primary business has been in audit services.   They have worked with some of the largest banks and the largest companies in the world doing audit services.

As part of their audit business they developed a software application that runs on a ruggedized mobile tablet, and this is the thing that I am really excited about, this ruggedized mobile tablet connects back into a back-end database. The database has API connectors into service desk applications like remedy BMC, ServiceNow, HP and they also have DCIM (Data Center Infrastructure Management) connectors to applications like nlyte, Aperture and Schneider so they are really a middleware solution, that is mobile, that allows you to download information from both those systems.

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Imagine a workflow ticket coming from a Service Desk to connected to the DCIM application. TRACKIT combines those in a mobile tablet that then allows you to do all of your work within the cabinet space.   So when moving devices around or changing network connections, I can literally look at the DCIM rack elevation drawing. I can look at the work order and I can move I can move devices within the rack from RU position one to position three, as an example. I can do that in a very visual way and I can also then validate that the DCIM application is correct visually, physically, and that the service desk asset management application is also correct. As I am doing my work I am also doing an inventory and validation of that inventory.

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What I found in my work as consultant in the space is that lots of clients that I talked to don’t have a very good, high level, of confidence that their data center infrastructure management suite is a hundred percent correct. This allows you, as your doing the work within a cabinet, to validate all those things. Do the work and actually make the changes and then update those systems automatically.

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The best part about it is it works in online or offline mode so I could literally be offline in a dark data center do the work, then go back and plug in and TRACKIT feeds all these systems with updates. The thing I also really like about it is that it is both ruggedized and highly secure so if somebody sticks it in their backpack and takes it home it’s not going to do them any good. TRACKIT is a purpose-built application that runs on the windows platform. The application feeds the TRACKIT database and then instantiates the other two systems.

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I have talked to a couple big clients that actually use TRACKIT to update five, six or seven different systems, inclusive of their accounting packages and some of their compliance stuff. I see a lot of products in the datacenter infrastructure management and the Service Desk space but I don’t see a lot of applications that join those together in a really meaningful way.

When I was doing some research with some of their clients, I also found out that they are telling me that they get a 10X productivity gains when they use the product. Making moves, adds, and changes requires less people and you can do it faster so they get more done and a huge productivity gain. Trackit is not a super expensive product to go out and buy so I suggest you take a look at it you haven’t already. Give it a go. The URL is http:www.trackit-solutions.com.

I think it is a very unique and interesting product and you guys could really get a lot of benefit out of it. If I can be of any help please reach out to me personally at Daniel@pinpointworldwide.com. Thanks for tuning in!

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Latest Technology to Reduce Data Center Audit Time and Save Money

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Daniel Tautges -CEO & Founder Pinpoint Worldwide @danieltautges

Ever heard the term “garbage in equals garbage out”?  Never has this been so apparent when advanced and expensive Enterprise applications are tasked to forecast, react, account, display, triage or audit highly sensitive and mission critical information.  In fact, yikes, this author is aware of several million dollar Enterprise applications that never made their way from the shelf as it was just too hard to keep the data that feeds them current.

Insuring data accuracy and reliability is a huge problem.  Luckily, one company (Trackit-solutions) has a unique mobile solution and process that is in production at todays top data center operators.

Please enjoy my Skype interview with Trackit-solutions founder and CEO Steve Beber and learn how Steve’s company is bringing his solution to the aid of global DCIM, ITAM, Fault Management and Service Desk implementors and operators.

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Data is the Foundation for Million Dollar Applications – Pinpoint’s Point-to-Point Exclusive Interview with Steve Beber

Data center auditing and data integrity are problems for a lot of companies. They don’t know where their assets are, they don’t know exactly what assets they’ve got, and they don’t know if they’ve been depreciated. Daniel Tautges talks to Steve Beber of Trackit about the problems data centers face with data auditing and data integrity and how they can be resolved.

Steve Beber is the CEO and founder of Trackit Solutions. Trackit is one of the leaders in this industry; they’ve audited more than one million assets worldwide. Before launching Trackit Steve held a number of senior management positions, most recently as VP of Professional Services for EMEA at Emerson Network Power (Aperture).

Daniel Tautges is the president and founder at Pinpoint Worldwide, a business acceleration company. Formerly he was the president of Nlyte Software, vice president of Rackwise, and vice president at Micromuse.

Why is data collection of interest to our audience?

Obviously if you’re buying assets it’s important to understand what they are and where they’re located. From a data center point of view, from an asset management point of view, it’s understanding your capacity. You grow within an environment, and if you don’t know what you’ve got and where it’s located you can’t do that accurately. It’s all about understanding where those assets are located. We do all IT assets with a focus on the data center, including power and network connections.

Is this only for big data centers? Small data centers? Regional distributors?

Any size. We’ve been doing this now since 2008, and we’ve done a range of sizes from small comm rooms to global banks. The biggest was over a quarter of a million devices for one of the world’s leading banks. We’ve worked around the globe in every size data center. It’s as important to a small business as it is to a large business to understand what assets are owned.

Are there trends in the marketplace with specific verticals like telecom or financial services?

In the early stages we saw a lot of banks and a lot of financial service businesses that were looking for audits to understand what they had and where it was located. I think some of that was driven by equipment that was put in very quickly, not necessarily in a structured and recorded manner. We’ve now seen the same trend over the past year on the telecom side due to the fact that the telecom industry is seeing a huge boom. A lot of communication rooms are now transformed into data centers. We trace what they’ve got and where it’s located so that they have an accurate record for consolidation and growth as well as for the future.

Why is it so hard to capture data? It sounds like a difficult problem for a lot of different industries.

It’s more a need for the right tool for the right job, the right people, and the right processes. I believe the reason we’re so good at what we do is because we’ve been doing it for eight years. We’ve matured over those eight years and we’ve refined our processes. We’ve got great teams of people who are very experienced with doing audits and we’ve got a great product.

What system does the data that you collect feed back into and can you interface with upstream and downstream systems that would utilize your data?

Sure. The Trackit Audit repository can pull or push information to service desks, CMDB, ITAM, and DCIM services. We can map existing data sources into our product, show them as rack elevations within our product, and take that onto the floor.

So if I’ve got an existing workflow system–for example, I’m a ServiceNow client or I’m a Remedy client or I’m an HP Service Desk or one of those asset management or service desk systems, how do I leverage Trackit and what value do you provide me?

Some of the failings in those products is the fact that they don’t have the visual element and they don’t have the mobility to take the data down to the floor. Before we became tablet driven, everything was about reading lines of data and not actually looking at elevations. No visual element, because the screens didn’t have the capacity to see rack elevations. With our new technology, there are rack elevations on the actual tablet, so you have the ability to view the rack against the racks that you’re actually looking at. One of the big advantages is you look at a rack and you stand side by side with that data, you can see instantly if there’s a problem with what you’re looking at, so the mobile view of rack elevations provides instant configuration feedback. It makes highlighting problems so much simpler.

If I’m a data center and if I have cables connected to the wrong port or if I have devices that are there but not accounted for, what kind of problems does that create? 

From a capacity planning point of view, from the management of day-to-day operations point of view, it can create huge problems. The worst case scenario is if you have an outage in a data center and you don’t know which devices have gone down, you don’t know where they’re located, you don’t know which applications are running and what servers. How do you go about finding those servers? You need to find them quickly. IT is at the center of a business and if a device goes down it can cost a lot of money. You want to find that device and you want to work out what the issue is. If you’re using outdated Excel spread sheets, it’s a lot like looking for a needle in a haystack.

Are you hearing anything from your clients about compliance? I would think compliance would be a big issue, specifically for the financial services business, but for any business that depreciates their assets.

I think more and more there’s a push on compliance, with businesses taking more ownership for the full lifecycle of the equipment they have. How can you be sure that you’re managing your data security properly if you don’t actually know where your assets are located? A lot of people use spreadsheets for data that they can’t be sure is accurate. I see a lot of legislation coming in the future putting more ownership on data center owners and businesses in general to have accurate records.

Are you seeing anything around security, such as not knowing where assets are physically located or thinking that they’ve been decommissioned when they’re still working?

Hard drives these days can contain confidential data and if a device is decommissioned and you don’t have accurate tracking of where that device went and how it was disposed of, all of a sudden that data crops up. This is where you hear bad stories in the press about data that’s been found in a dump somewhere, and it turns out to be bank records or account details. We track assets throughout their lifecycle and then at the end of their lives have a document attached to show that they’ve been properly disposed of.

From a Trackit perspective, give me an idea of the envelope of the solution, what you guys do from end to end, how you differentiate yourselves.

A lot of solutions on the market are focused on the high-end features vs. low-level raw data collection–things like worrying about graphical dashboards instead of focusing on asset management. If you build a house you wouldn’t build the house from the roof down. You have to start with the core, asset management. You have to start with good quality data and you have to have a mechanism to maintain good quality data. Once you have that, then you can layer on other things.

We like to take people on a journey, and that journey begins with a data collection workshop that introduces our approach, typically a one-day workshop. In the workshop we look at what the customer is doing now for asset management. We present some best practices and then we come to a decision with them about what they want to achieve, how they can maintain that, and the standards that can be adopted to maintain the system accurately.

We want to find a way for the customer to maintain good asset quality first, and once they’ve done that for a set period of time we look at whatever layers can be added on, such as intelligence sources that can be polled internally or sniffers and devices on the network that can collect information. We also look at power audits and network connection audits that give even more granular information and permit more complex reports. Then we can build reports and dashboards that help the customer get the benefits of that good quality data. It’s very much a phased approach. We like to say we take customers on a journey. We start at the very beginning, set standards, understand what it takes to get and maintain good quality data, and then take that through a full lifecycle so the customer gets value out of it very quickly.

Can you give me a use case? Where was the client before Trackit and after Trackit? What did the journey result in for that client? 

Over the last eight years we’ve done some big global projects, with clients including the world’s leading banks, retailers, and telecoms. We had a customer recently that for six months had been trying to get data to deploy on a site. It was about 500 racks, around 11,000 devices. The issue was that the in-house teams were trying to collect data as well as doing their day jobs. It wasn’t happening. We went in—in a two-week period, we collected 11,500 devices. A team of five, which is one administrator and four auditors, will collect in excess of 1000 devices per day. Every device we hit is QAed by the audit administrator. Every time a device is audited it’s timestamped and user stamped. We have a full tracking history. All the data is in a cloud environment that we hold for customers, and it’s visible at the end of every working day. There’s no waiting around, there’s no time lapse, it’s instantly available, instantly viewable, and that data can then be exported or it can be maintained and managed in the cloud. It provides real value for money straight away.

During these operations they’re still doing move, adds, and changes?

Typically, what we do is put a change process in place so that the customer is recording their changes while we conduct an audit. We don’t want the changes to affect anything, so we like to make sure the data’s contained and not causing a problem.

So can you do an audit anywhere in the world?

There’s no limit. We’ve completed audits in Australia, Brazil, China, Singapore, India, and all over the US. We deploy teams wherever there’s a requirement. Very small sites to very large. It’s critical for all sites to know what’s there and what equipment they have.

What about pricing? How do you price the product?

The auditing service is priced per device cost, so typically what we do is go out to a customer and conduct a pre-audit survey. We can deliver a project plan to the customer with timing, resource structure, and associated costs. We offer several different flavors of solutions, and we sell bundled kits. We’ve got some of the biggest banks around the world using those for their asset management in conjunction with their DCIM tools. Then we have our Enterprise solution, which can be a fully housed cloud service that we manage. You can access it via the web, or you can have it hosted internally. Different flavors. One size doesn’t fit all. We have a completely different approach for banks, for telecoms, for small telecoms, for daily trading rooms. We have different technologies, different sets of equipment, some of which are very bespoke. It really is about just what fits the customer.

How would someone get more information about Trackit?

Get in touch via:

info@trackit-solutions.com

www.trackit-solutions.com

Data asset management and good quality data are important. This is a solution that’s been grown and developed over the last eight years, it’s very mature, it’s very tried and tested, we have very good case studies and very good customer stories that we can share.

3 Ways to Reduce the Costs of Data Center Audits

Summary

Auditing becomes more critical all the time. It’s always been important for a business: it prevents fraud, provides trustworthy financial reporting, and helps an organization pursue its objectives. Government regulations makes auditing even more important. The consequences of sloppy business practices can be truly painful, and good auditing ensures things stay on track.

In the recording below Tautges talks to Bruce Frank about his data center audit experiences and how he was able to make audits less costly, faster, easier and more accurate.

Citi’s Vice President of Global Technical Operations, Bruce Frank, is a twenty year veteran of technical operations.  He was formerly a Director for Dendrite International and EDS.

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Daniel Tautges is the President and Founder of Pinpoint Worldwide, a business acceleration company. Formerly he was the President of nlyte Software and Vice President of Visual Network Design (Rackwise),  Micromuse (now IBM), and Lucent Technologies.

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3 Ways to Reduce the Costs of Data Center Audits

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What is the Citi data center estate look like today?

Currently we have 14 mobile strategic centers spread out across the four regions: North America, Latin America, Asia, and Europe/Middle East/Africa. Outside the strategic data centers which are managing our critical business applications we have 285 tech rooms and satellite data centers. Some of these satellite locations house between 5,000 and 10,000 servers. We have 8,000 branches that we manage small pieces of infrastructure for and 76,000 physical servers. At one point we were closer to 100,000 servers, but now we’ve scaled down from the physical server perspective. We have another 125,000 to 150,000 devices that are under management within the data center.

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From the standpoint of auditing, what do you consider best practices for an audit and why is it so important to Citi?

We’re under scrutiny all the time, not only internally but externally, especially on the investment banking side. There’s the FCC and Sarbanes-Oxley. I’m mainly dealing with data quality. Probably ten times a year we have to make sure that information in the database represents a physical device. There are a lot of fines that could be assessed just based on the way we have our infrastructure set up. We’re involved in exercises; we probably have 20,000 or 30,000 pieces of equipment across the globe and we may need to know what applications are on the equipment and what the equipment connects to. Based on best practices, we strive for 95% data accuracy, what’s in the system vs. what’s on the rack. Once a year we officially reconcile, which involves a manager signing off that everything has been checked. This involves a walkthrough of every single data center from top to bottom and ensures that the device isn’t just in the rack but that it’s also the right model and the barcode is correct. We’ve had stuff that was decommissioned five years ago but was still in the rack, and we’re paying for the maintenance and warranty. We depreciate our equipment for three or four years, and without a proper inventory it becomes very difficult to manage.

Last year a government agency came in for business-critical information. They couldn’t find the device with the data and they had to do a walkthrough of every single device in the data center. After about two weeks they found the device, wrong name on it, wrong label, but they found it and the data was there. The way they found it was by serial number and IP address.

What made you successful doing audits while reducing costs?

Data quality is my number one goal. For the last 12 months my team and I have been working on data quality. We’ve been scrubbing 250,000 pieces of equipment to ensure that the quality is there, that the make is right, the model is right, the platform and connectivity. One of the things we do goes back to reconcilement. We brought in Trackit. The goal is to be able to update information while you’re at the rack. You don’t have to go back and forth. You have the tablet right in front of you, you’re executing right there.

All you do is take it to your desktop and use the connector and it’s basically sucking in the data, consuming the data. The data’s been entered and verified. Now we have a verifiable source, and when you go to the auditor you can see it’s been verified. We have a pretty accurate inventory at this point.

In the past when we were doing audits it would take maybe a half an hour to do a rack. You need to verify the model and barcode. We probably have 7000 or 8000 pieces of equipment in each datacenter, so the amount of time to verify all of this is significant. With a scanner you can bring that time down to one minute.

The first year it may take a little longer. In the past it was taking us about three or four months. Now we’re going to get it done in a month, and the next year in three weeks. Everything is barcoded, and we have an accurate inventory. At the end of the year we should be able to open up each cabinet and in two weeks we should have our inventory done.

So when you were putting together your requirements for a tool, you wanted something that could be integrated to backend systems or DCIM platforms with connectors. Offline mode was very important because of your lack of connectivity. And you wanted something easy to use that didn’t require a lot of training. Were there other requirements you had in mind when you chose Trackit as your tool?

That’s probably a good summary of the rationale for the choice. A big part was the integration, the flexibility of the tool, or the ability of the tool to talk to these other APIs. The integration with Aperture was major. The ability to pull down data and see it visually was important too. Obviously Citi has a large footprint, and new tools don’t always scale, and we end up doing a lot of work ourselves. With Trackit, 80% of the installation went off without a hitch. Overall I think we’re in good shape now.

app infrastructure

Maybe we could talk about where you were before and where you are now.

Yes, well a big one was the audit. Each audit used to require between five and seven full time employees in the front in the data center and five more employees in back. Somebody has to get the information uploaded. At least ten people worked on an audit, and the audit took three months. Now an audit requires two employees and takes less than a month. We tried working with RFID. It worked, but it was very cumbersome, very difficult to manage. You can take the Trackit tablet, hand it over to the next guy, and he can see just looking at the screen what he needs to do next. You don’t have to fiddle faddle through pages on a clipboard. We had multiple data entry points, but with Trackit you have this tool sitting in front of a server, you’re verifying and updating it, you’re syncing your pad, and you’re ready to go with no human interaction necessary. It’s a somewhat automated process. Now we have increased accuracy for DCIM and ETM. We still have challenges. When moving data, we need to make sure that the data is properly represented. For audits we need to make sure the data is where it says it is. Trackit supports the end-to-end lifecycle we want on our equipment.

So audits need to be done to ensure accuracy for DCIM planning and workflow, warranty and maintenance spend, software licensing costs, ledger depreciation, and ETM data theft. You said Trackit reduces audit costs by as much as 80%, which is significant. Can we get some idea what the future requirements are?

One is integration with the CA tool so we can track CA development. That’s a major one. We’re moving pretty well on that piece. We’ve already told the CA organization we’ve made an investment with Trackit for the next three to five years, probably longer, so we want to move forward with the investment we made with this tool. We want to take the tool and make it do more for us than we’re doing right now. The other big piece here is the ability to use the Trackit application to do one of two things. The first thing is building out a data center where we don’t have a full visualization. We just have big rooms there. It would be nice to say, “We need new cabinets,” and with the Trackit tool drag and drop cabinets, sync it up, and—boom—the new cabinets are on the floor there. It would give us a way to get information into our drawings.

before-after-trackit

The second thing we’d like to do is leverage the Trackit tool to supplement our installation process. Something we do now is hardware validation. A piece of equipment arrives at our loading dock, it needs to be scanned, it’s scanned with a barcode number, we need to go back to Aperture and put in a barcode number, put in the serial number, the model and make. We have most of that information already because we’ve already created a request. So now there’s a guy on the dock trying to figure out where this equipment comes from and what the purchase order number is. We want to leverage the Trackit application and basically download the information to a form on Trackit where it has that synchronization opportunity. We want to take that information out of the DCIM application that we’re using at this time and drop it in the Trackit application. As a delivery comes through the door, the scanner pulls in the serial number.

We use Trackit to produce barcodes, and we can get that number on the box as it comes through the door.We’re validating and putting quality into every step.  Trackit gives us the ability to tack critical assets across our global estate from the cradle to grave. .

 

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