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Companies both large and small are promoting a “don’t buy/invest in any gear or software” just “pay us per month and we’ll share our cool stuff we have with you” model.  This is opposed to a “buy you own” approach which is possibly more traditional to your organisations whether large or small. 

These companies set up a shared system/platform) that they then slice up and sell to customers. The concept of “shared systems” has been around since the early days of IT. In fact, early computers were mainly shared system because the workstation/PC didn’t exist yet!  What has changed is effectively who owns what.

While there are exceptions, such a system refers to “software as a service” or “hardware as a service” that satisfies some key criteria I define as:

• You don’t own anything; you rent space/capacity – effectively a privilege of using said service.
• Other customers use the same system (it is a homogenous service).
• The system is off site (often in another country) and accessible only via the internet, often the web – some very good points to this, but there are risks and concerns for businesses to address.
• You have limited (if any) control over how the system operates – your business processes match the system, not the other way around.
• You pay for (rent) the service on an on-going basis and if you stop, you usually lose your access.

So a customer is paying for the use of software or a system.  That system could be processing power to run a website, it could be a web based accounting package, it could be file storage or it could be an email marketing tool – there are tons of examples.  Whatever service/system it is your purchasing, this way of buying makes it somewhat simpler for people to see, focus on what is important to them, and make a decision on, and ultimately use.  How any why?  Does it make sense to go Cloud?

In my next post I’ll dive deeper into that. Stay tuned.

This series of posts will outline advantages and disadvantages of three possible ways of running your business’ systems: cloud/service, privately hosted and on premises.

This overused – and in my opinion poorly understood – term “cloud” has lead me to prepare a series of posts that outline an opinion on “are cloud based systems right for my business”. I see a need for good advice on the subject, after recently discussing options with a current client of Rhythm IT looking to upgrade their systems. The discussion included what systems they might need, the costs involved in setup, operational risk, migration and on-going OPEX, and ultimately should they retain systems in house or move to cloud services or to virtualise using remote systems.

I loosely define a “cloud based system” business model as the concept of “an on demand homogenous system/service that is supplied by a provider on a large scale to many customers”. This differs from the Wikipedia definition, but I’ll dive into this further in the follow up posts. A point I will address now though is type of arrangement is not new – the terms used to refer to and describe this model have just evolved and changed to continue to drive customer demand. IT marketing and sales people in large companies enjoy making up new buzzwords and concepts, in order to continue selling products/services through the value chain to the end user/customer. A customer could be new; they have a new need for a system, or they are migrating from one system to another. A customer could also be upgrading – out with the old in with the hottest new system since last year.

Eventually most business reach a critical mass where they want to achieve more but can’t because their IT setup is simply not up to the task. Decision makers realise this, but are not sure how to proceed next because there are so many options. We have seen that with a lot of clients and always provide advice on a case by case basis. Everyone’s needs (or wants) are different. As a decision maker you must be careful when choosing a new system because while marketing and sales people on the other end of a phone may have a good/vague/no idea of what the system they are selling can do for you (they wouldn’t be good sales people otherwise!) they most likely have no idea what it will do and won’t do for your business.

It is that last point that is critical to your business’ operations and on-going success. I do not intend these posts to be lengthy or detailed, as every business’ needs are different and you should seek advice on your own systems. You should seek specialised, personalised advice to help choose what is right for you, and then by the way you’ll need someone to help get you up and running.

This post is part two of what may turn into a series of blog posts surrounding VOIP and technologies associated with telephony. This post will focus on one topic that decision makers and financial controllers will be interested in – cost savings migrating from traditional phone/PABX systems (commonly referred to as PSTN or POTS) to a Voice-over-IP (VOIP) phone/PBX system.

Current costs incurred –

• A $45 (ish) per month charge for the “privilege” of Telecom/TelstraClear etc per line.
• 4c per minute local call
• 35c per minute mobile calls.
• Say 20c per minute national toll calls.

Obviously you can shop around and get better calling rates – I just use these rates to help illustrate this example.

I’m now going to list the similar charges you would incur if you were on a VOIP system –

• A $20 (ish) per month charge for a “SIP trunk” – equivalent to either one incoming or one outgoing simultaneous call i.e. a line.
• Free local calls.
• 25c per minute mobile calls.
• 4c per minute national toll calls.

To keep things interesting, I’ll outline a few of the possible cost savings using an office set up that our friends the dynamic duo Batman and Robin (B & R) occupy.

Scenario 1: A phone in the Bat Cave

The Bat Cave has a phone that Alfred can use to get a hold of Batman & Robin on their mobiles when necessary, and let’s say they also call the PD and the local Pizza store quite often. Their calling bill is $400 per month, 25% local calls, 75% mobile calls.

Robin > Holy smoke Batman! If we change to VOIP we’ll save ourselves $210 per month! Imagine the extra pizza we can order with those savings!

Batman > You’re right Robin! With those savings, we could afford a new coffee machine too!

Scenario 2:

The dynamic duo have been busy fighting crime, and the Gotham PD have been so pleased with B & R’s help they’ve asked them to expand their operations. Coast City PD has heard of their success and are asking them to set up a Bat Cave in their City. With 2 offices (one in Gotham, one in Coast City) a fair amount of inter-office communication will be necessary to keep the crime fighting coordinated. So say each office has 5 lines and they will incur toll charges when someone in Gotham calls Coast City (and vice versa). Their calling bill is $2000 per month per office, 25% inter-office calls, 25% local calls, 25% toll calls, 25% mobile calls.

Robin > Holy calculus Batman! – A quick overall calculation gives us a monthly saving of $3250!

Batman > Well Robin, this is modern technology for you! Let’s order a Pizza, I’m starved!

You can quickly appreciate that the cost savings are larger the more lines and calling you do – it’s a simple economies of scale.

By now you’ve probably heard about the GST change from 12.5% to 15% occurring this October. Put it this way: if you haven’t then start panicking and head to www.ird.govt.nz to read more. What’s important is that you make sure your accounting system can handle it. What do you mean by that?

You have an up to date accounting package or point of sale system (cash till). Whether that’s MYOB, Quicken, Cash Manager or a spreadsheet, you need to make sure you can add a new GST code at 15% and have that apply from 1 October.

If you have a non-standard balance date (i.e. your yearly accounts don’t end on 31 March) and you don’t file monthly, you may need to file a GST return for the end of September (at 12.5%), then another for October (at 15%) before continuing your regular 2 monthly or 6 monthly returns. You’ll need to get this information out of your accounting package.

You’ll need to make sure that any invoices/EFTPOS dockets/reports you produce on or after 1 October have a GST rate of 15% applied. Anyone who sends you an invoice for your purchase has 15% added rather than 12.5%. While you may be diligent there are sure to be some who have missed this or have things set up incorrectly.

MYOB and others have already sent an update CD to their clients who are subscribed to the yearly support. If you are not subscribed then you will need to purchase an updated version. MYOB have recently renamed most of their MYOB Accounting suite to MYOB AccountRight, and the program now has a purple or yellow/orange icon instead of the traditional green.

Those of you with Xero or any other online/web-based accounting system should be up to date and have received advice from your provider regarding the GST rate change. Those clients who operate a custom system (such as a CRM or another accounting package) should also have received advice from your provider regarding the GST change. If you have not, then you should contact them immediately so you are not left out.

If you have concerns that your accounting system is not compatible with the 15% rate or not, feel free to contact us. Rhythm IT can source an updated accounting package for you and are happy to assist with the upgrade to ensure a smooth transition. This may involve a transition from one package to another, so it is best to get on to this as soon as possible.