Assessing the needs of MSPs, integrators and other organisations and the challenges they face when sourcing quality third-party professional project and technical services for Cisco technologies.
The United Kingdom voted to leave the European Union on June 23rd and we’ve heard all about the impact on International stock markets, multi-conglomerates, worldwide economies and not very much about the little guys – small businesses.
Much doom and gloom has surrounded the Brexit vote, primarily due to the multitude of legal and financial uncertainties. There is no doubt that the UK leaving the EU carries risks, but counteracting those risks are an equal amount of opportunities.
This blog will explore the influence of the Brexit vote on an SME in the IT sector offering Cisco Professional Services. We will objectively explore any negative and positive impact the Brexit vote has had on our company, our finances and business operations.
As a Cisco Professional Services organisation, 4CornerNetworks specialise in the provision of Cisco Engineers making our business model dependent on market prices in the recruitment of Cisco Engineers. We operate Internationally, often employing Engineers from the EU and USA where the performance of the Pound Sterling causes both negative and positive currency fluctuations.
Post Brexit vote in the UK caused major currency fluctuations on the Pound Sterling against the US Dollar and Euro. Let’s look at the currency fluctuations of the Pound Sterling vs the US Dollar and the Euro from June 23rd, the day of the Brexit vote.
£ Pound Sterling to the $ US Dollar
$1.48 to £1 23/06/2016
$1.33 to £1 03/08/2016
$1.29 to £1 08/07/2016 = 28.12% fluctuation from 23/06/2016
The pound reached its lowest point on 8th July trading at $1.29 to £1 and its highest point of $1.48 to £1 on the 23rd June resulting in a 28.12% fluctuation. Today the price is $1.33 to £1 where the fluctuation from 23rd June is 22.2%.
£ Pound Sterling to the € Euro
€1.30 to £1 23/06/2016
€1.19 to £1 03/08/2016
€1.16 to £1 06/07/2016 = 18.2% fluctuation from 23/06/2016
On June 23rd the Pound fluctuated by 14.3% against the Euro against today’s price of €1.19, and reached a low of €1.16 to £1 on July 6th resulting in a 18.2% fluctuation.
Price of Doing Business
The average salary of a CCNA in USA is $72,039. At the current exchange rate of $1.33 to £1 is £54,165. On 23rd June the exchange rate was $1.48 to £1 meaning the same CCNA Engineer would cost £48,675 which is a cost of £5,490 for the salary of a single Engineer. (source: http://www.payscale.com/research/US/Certification=Cisco_Certified_Network_Associate_(CCNA)/Salary )
A CCNA in Europe (Take Germany as an example) earns an average salary of €45,562. At the current rate of exchange €1.19 to £1 is £38,287. On 23rd June the exchange rate was €1.30 to £1 meaning the same CCNA Engineer would cost £35,047 which is a cost of £3,240 for the salary of a single Engineer (source: http://www.payscale.com/research/DE/Certification=Cisco_Certified_Network_Associate_(CCNA)/Salary )
However, fortunes are reversed when we receive payment from organisations in Europe or USA. If an invoice for $10,000 was received on 23rd June, this would have been worth £6,757 but the same $10,000 invoice today would be worth £7,519, a surplus of £762.
A €10,000 invoice on 23rd June would have been worth £7,692 but the same €10,000 invoice today would be worth £8,403, a surplus of £711.
The currency fluctuations can be equally negative as they are positive which results in the solidification of uncertainty and therefore a cautious approach must be taken when dealing with international clients, currencies and projects. Operating in volatile market conditions is a business challenge we must accept face on, but remain equally cautious.
Any International growth ambitions small businesses have must now be placed on hold, but for how long? Planning to set up new offices, employ new staff and trade internationally with multiple currencies fluctuating by up to 30% in a matter of weeks presents too many unknowns and a period of stability must be reached before the UK’s small businesses can shake off the shackles and grow. It all depends if you see the glass Half Full or Half Empty?
*Please note the rate of exchange is at 03/08/2016 and will vary
In most ways, the telecommunications revolution of the last few decades has made the world a much smaller place – but not necessarily for those who work in the industry.
Where before being based on an offshore platform or a remote research station was an isolating experience that removed workers from normal life for weeks or months on end, now they can do their Christmas shopping between shifts. And a job that may once have involved travelling for days at a time to collect research or meet colleagues can now be done without leaving the sofa at home.
But many aspects of telecoms and ICT have got more complicated, and some jobs still need to be done in person. Ironically, one of those jobs is often setting up the very systems that make the highly connected, no-need-to-get-off-the-couch world possible. And this can present real difficulties for firms who don’t have the scale to make engineers available across wide geographical areas.
British Telecom Engineers
Back in the early 1980s, all things telecom in the UK were run by one firm, BT – or British Telecom as it called itself back then. Its privatisation and subsequent industry deregulation gradually opened up a vast and rapidly growing market to hundreds of ambitious smaller players, even though the old state monopoly remained a domineering presence. Many thrived on sub-contracts from BT itself, while another huge industry grew up around the ICT infrastructure being built by every sector of the economy to take advantage of the communications revolution.
But whereas there was once always a BT engineer almost on every street corner, these smaller firms face the difficulty of finding suitable support staff to reach all geographies to which they are committed. For UK firms playing a leading role installing technology for global industries such as oil and gas, finance or law, this can mean having to reach dozens of countries in order to fulfil a contract.
At the same time, the technology itself has also got more complicated, and aspects have become very specialised, meaning that suitable skills can be very thin on the ground. For Cisco engineers, for example, the highest CCIE level of specialist can include no more than a couple of hundred certified engineers in each category, spread across the world.
Shortage of Cisco Security Specialist Engineers
Recent reports have focused on a shortage of security specialists, and the six figure salaries that firms are having to pay to secure their services. Undoubtedly, rising awareness of the threat from cyber crime means that security experts are in huge demand, and the crisis is particularly acute. But in fact some of the other top disciplines are also experiencing rocketing demand, such is the key nature of Cisco networks to most industries these days.
Whether you are looking for a CCIE specialist in Security, Wireless, or Routing and Switching, you will find it hard to get their attention, and not just because they are usually engrossed in learning more about these fascinating technologies. Should a company wish to directly employ an expert in each of half a dozen specialities, its IT budget will swell by more than half a million pounds a year.
This is where outsourcing comes into its own, as even relatively small firms are able to offer a comprehensive service to their clients thanks to our full UK coverage of Cisco engineers, and our international Cisco resource.
Outsourcing Specialist Cisco Services
The general benefits to business of outsourcing specialist services are well documented /LINK, and naturally these apply for network engineers too. You will reduce risk, control capital costs and be free to concentrate on your core business. But the nature of a white label service goes further and gives even greater advantages.
Any client firm can confidently claim that it can get a specialist engineer to any part of the UK, at any time of day or night, every day of the year. This allows them to bid on a range of contracts that would otherwise be prohibitive, potentially undercutting and out-competing larger rivals that employ a smaller range of Cisco-certified staff in-house. The ultimate client is also a winner, benefiting from a high quality of service – and of course they need never know that engineers were sub-contracted in.
Many VAR’s, Channel Partners and MSP’s are responsible for allocating the correct technical resource to monitor and manage their client’s IT Networks. Do they hire an external Cisco Network Engineer or allocate an in-house generalist IT Administrator?
IT Experts and Network experts have distinct specialisms and require the application of a significantly unique set of skills. IT Administrators tend to a multitude of IT duties ranging from desktop support to software installation & configuration. Cisco Network Engineers on the other hand are more specialised with typical duties ranging from VPN tunnelling to intricate network designs.
Organisations can be reluctant to hiring external experts as they prefer to assign generalist in-house IT staff to attempt complex networking tasks, often to the detriment to the end client.
Limited Internal Resources
Ask an IT/Systems Administrator for almost any VAR, MSP or Channel Partner what their duties are, and their answer will be “Everything!” They need to monitor & fix, software & hardware, back up data, enhance performance, security, storage and the list goes on. Internal IT & Engineering Departments are generally lacking in specific IT specialist functions. It would sink many businesses to the bottom of the ocean if they had experts in Cisco, Juniper, F5, Microsoft, Dell and Citrix who all need regular work. Not only do you need vendor specialists, you also need to have them situated in every single country where your clients are located.
It is therefore imperative to realise the limitations of the technical resources you have at your disposal in-house. You can hire an external expert in Cisco Networks or you can muddle along with what you have.
The Problem with Muddling Along
Round pegs fit into square pegs no problem, but they don’t stay there as the wrong tool has been used for the job. Holding your extremely expensive network together with sticky tape and a few short term fixes may solve an immediate problem, but it will simply add to the magnitude of problems brewing underneath those sub-standard fixes.
Systems administrators or IT generalists may be able to maintain and manage basic network functions, but complex configurations and designs MUST be left to the experts. If you need a CCNP Wireless, then hire one, if you need a CCIE Security, hire one. Prices from one Cisco Engineer to another varies depending on individual skill sets and market experience, where that experience should not be underestimated or undervalued. Technical couriers are often hired by organisations instead of paying the market price for a CCNA Engineer in an effort to minimise the cost of technical resourcing.
Muddling along might save you a penny or two in the short-term, but if I was your client, I certainly wouldn’t be satisfied that my critical business problems are solved with inferior solutions. Clients pay a premium price to have their networks maintained and managed, subsequently only premium solutions will suffice.
Quality of Service
Cisco certifications are highly regarded by Enterprise organisations, VAR’s, MSP’s & Channel Resellers, yet lower prices too often take precedence over quality of service. Cisco hardware is the backbone of all networks in almost every Enterprise organisation, which requires the application of Cisco best practises at all times to guarantee quality and continuity of service.
Here I’ll be bold and hail Cisco Certified Engineers as the best the market has to offer, no other certification comes close. When a CCNA or CCIE Engineer is assigned to complete a specific Network task there is no other IT Expert or Technician more qualified, experienced or skilled to successfully do so: round pegs for round holes.
By allocating anything other than a Cisco Certified Engineer to tackle a Cisco Network task is prioritising price over quality of service delivered. Cisco experts may be more expensive than the cheaper in-house generalist option, but if you think experts are expensive, wait and see how much amateurs cost you.
The global IT Outsourcing market is worth in excess of $250 billion and rising each year by 6.8% CAGR, demonstrating the rise in demand for Enterprises, the Public Sector & SME’s to outsource their IT requirements year on year. Companies elect to outsource for a number of reasons – to cut costs, to access cheaper resources and to achieve economies of scale. All of which are focused solely on the need to increase profits by decreasing operating expenses, it’s all about improving the bottom line.
Now that the bottom line has evolved into the triple bottom line, more organisations are beginning to realise the importance of the planet and people have in generating and sustaining profits. “But having a green focus will cost my company money” is the myth I often hear from ICT providers, Enterprises, Telecommunication companies and Managed Service Providers – but a myth this is.
This article will explore how organisations may be losing out on opportunities with potential partners & customers by being profit driven with no sustainability strategy. Business objectives in any industry are simple to understand – generate profits. However when it comes to IT Outsourcing, it’s now time to go green or go home.
Carbon Footprint, Energy Efficiency & Consumption Reduction
Whether it’s IT Networking, Mobile Apps or Cybersecurity, when IT functions are outsourced, the impact on an Organisation’s carbon footprint is positive. Take for example Company A, they have offices in over 50 countries and a central IT Department in country X. Now if Company A have an issue with their IT Network or an IT Security issue then they need to send an in-house Network Engineer or IT Security Expert to country X, Y and Z. The journey of the in-house employee will proceed by driving to the airport, flying to their international destination, then driving to the office in country X – already the carbon dioxide emissions emitted has damaged the atmosphere.
However if Company A decided to Outsource rather than send in-house staff on an around-the-world trip, significant reductions would be made in carbon emissions. Less petrol/diesel would be used as no/shorter car journeys would be necessary, no jet fuel consumed, no oil to maintain vehicles and no additional electricity – Same outcome but this time with a reduction in carbon emissions and at a fraction of the overall cost – sustainable savings.
Regulatory & Market Demand
Directors with their fat bonuses and Shareholders with their fat dividends shouldn’t be the only stakeholders to influence business decisions – listening to the demands of your customers and potential partners are just as important.
Customers now actively seek companies with strong green credentials and base their buying decisions on the strength of their green/sustainable credentials. So many products and services are homogenised that often the only point of difference between companies is to embrace sustainability – it’s no longer tree huggers and revolutionists demanding protection for the environment, it’s YOUR customers.
According to the Brown-Wilson Group’s Black Book of Outsourcing, 21% of EU & USA Organisations outsourcing specifies that green elements must be included in contracts, a figure which is set to double in the next 12 months. In the UK Public Sector, environmental regulations in procurement decisions stipulate that sustainability must be considered. Therefore public sector contracts are no longer driven by the cheapest prices, but the 3 P’s – Profit, People & the Planet.
Climate Change Agreements (CCA) allows energy intensive industries such as Data Centres to reduce their energy consumption for a reduction in levies. Data Centres have now reached a significant size and maturity that as an Industry they contribute to lowering national carbon emissions. With an increasing amount of organisations outsourcing their Data Centre needs, there is a direct correlation between IT Outsourcing & improving sustainability.
Service Level Agreements (SLA’s) is another area in IT Outsourcing whereby green-focused KPI’s are part of the contract terms. Mileage, emission reductions and sustainable materials are all part of modern-day “Green Contracts” and if your company isn’t prepared then it’s time to go green or go home.
Going green is no longer about box ticking and greenwashing, your end-customers demand it, your partners demand it and governments & legislation demand it. If your customers demanded a new product, one would be invented so when they demand a sustainably driven company, give them it. Do you think having a sustainability strategy in the world of IT helps or hinders IT Outsourcing?
With a market cap of $119 billion, 2014 sales of $48 billion and ranked number 12 in the world’s most valuable Brands, Cisco are the industry leaders in IT Networking equipment. The likelihood is that readers of this article will be working with or have worked with Cisco Network Systems. Therefore if your company is working with a Cisco Network System then you’ve faced the dilemma of choosing between outsourcing the need for Cisco Support or employing in-house Engineers.
As an SME, Enterprise or a non-ICT related company with a Cisco IT/Phone system, then you need to think about the level of Cisco Engineers you need to employ for your business. Whereas Managed Service Providers, Professional Services & Cisco Channel Partners need to think about the level of Cisco Engineers your clients require. Either way, outsourcing can provide your business with the specialist Cisco skills you need and at a fraction of the cost and risk of employing Cisco Engineers in-house.
1) Lower Operational Costs
In the UK Cisco Engineers command high salaries and rightfully so, they’ve studied and trained hard to achieve their status. Current 2015 average salaries for Cisco Engineers in the UK are:
Your Operational costs don’t end there, other costs associated with in-house Cisco Engineers are:
- Holidays & Sickness
- Salary benefits – Bonus, Shares, Pension, Health Care & Annual Pay Increase
- Additional Benefits – Company Car, Petrol Allowance, Laptop, Mobile Phone
- Maternity/Paternity Pay
- Staff Training
- National Insurance & Tax Contributions
- Portion of running costs – office, furniture, equipment, admin costs & consumables
- Cost of Employment – In-House costs or Recruitment Agency
Accumulating the additional costs of employing in-house, a CCNA salary can be well in excess of £50,000 per year or around £23 per hour. Compare this to the average hourly rate of a CCNA which is currently £18 per hour resulting in savings of 27.8% when outsourcing against employing in-house. Your wallet, your choice.
(Visit http://www.accountingservicesforbusiness.co.uk/calculators1/true-cost-of-an-employee/ to calculate the annual cost of your employees and http://www.itjobswatch.co.uk/contracts/uk/ccna.do for CCNA rates)
2) Access to Skills & Knowledge
The Internet of Things (IoT), mobile devices, smart cities, big data and the human fascination and dependency on technology facilitate the need for Cisco Engineers to specialise in certain tracks. You might have an in-house CCNA, or CCIE, but do they specialise in Unified Communications, Security, Wireless, VoIP, R&S and Data Centre? How many hours and years of training would be required to have access to such a varied and multi-skilled workforce in-house? How much would this cost your company?
Having access to the skills and knowledge of certified Cisco Engineers is the most significant reason to consider outsourcing your need for Cisco Support. Quality of service is often cited as a reason not to outsource, however if you focus on creating strict SLA’s and define a clear scope of work between your outsourcing partner, then you can achieve exemplary quality of service for your end customers.
If you outsource your Cisco Support then you simply pay for what you need and use. Replace outsourcing with employing the multitude of Cisco Engineers in-house and you’ll need to ensure you have enough work for the Engineers every day, 52 weeks of the year.
How much time and money do you think line managers and HR departments waste on frivolous staff issues? “Can I have a day off for the dentist?”, “I need to take my dog to the vet” and so on. Employees also are savvier with their knowledge of employment legislation and their rights – holidays, sick pay, pensions, maternity leave and more heavyweight issues such as unfair dismissal and equal rights. It’s not only your balance sheet at risk; it’s your Brand, reputation and credibility in your industry. Taking risks is part of business, but if you can avoid being exposed to such substantial risks then why wouldn’t you outsource.
Do you employ in-house or outsource and why? However opinionated you may be, please feel free to leave your comments.
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