Improve Security and Efficiency By Going Cloud

Microsoft’s cloud trust study indicates cloud security is a matter of perception.  A recent Trustworthy Computing survey indicates that small businesses that try cloud services seem to appreciate what they have to offer.  This is no surprise since they are in business to make money, not manage infrastructure.  Outsourcing is an opportunity cost decision.  In almost all cases the impact to the business cash flow statement will override any concerns regarding outsourcing vs. insourcing.  Small business survival depends on the adoption of LEAN principles.  Reducing waste reduces cost.

94 percent of SMBs have experienced security benefits in the cloud that they didn’t TwCCloudSMBTrustinfoUS_Page[1]previously have with their on-premises service, such as up-to-date systems, up-to date antivirus protection and spam email management.

91 percent of SMBs said the security of their organization had been positively impacted as a result of cloud adoption

Many non-technical SMBs without full time IT staff are going to experience benefit from cloud services.  In order to get the full benefit of security monitoring, it has to be a dedicated 24/7 function.  An 8-5 business that doesn’t generate revenue for the other 16 hours is sinking money in performing this function themselves.  From a financial point of view it almost never make sense to ramp up a 24/7 IT shop in these circumstances.

While the survey discusses businesses with 25-499 PCs  there is another demographic that cloud services can provide benefit to.  Studies indicate that up to 50% of the US workforce will be self-employed by 2020.  The group that stands to benefit most from cloud services is the 1-5 person company where everyone involved is an owner/operator and all other work is subcontracted.  Cloud services make the most sense where the owners are the salespeople and unrelated people are subcontractors.  It doesn’t matter if you’re selling IT services or office cleaning services, you are already taking on risk from subcontracting.  Let’s pretend you are selling IT services and you find a few generic MCSE’s to do the hands on work that are 1099 contractors or B2B such as LLC to LLC.  If your entire business is built around finding these freelancers to do the work, you are already outsourcing.  What possible reason could you have for wanting to insource your IT infrastructure or personnel?

Security professionals that only look at security may survive in Enterprise IT.  In SMBs every employee is not an IT professional, an accounting professional, etc.  They are stakeholders.  The ability to diversify your portfolio of skills, roles, and personality traits is what will make you a winning team member and a winning investor.

Are You an Acqui-Hire?

There has been some criticism of Yahoo’s acqui-hire strategy. There are those who believe that it clearly sends the wrong message to existing staff. Rather than work for a meager salary, one should simply quit to become part of the acqui-hire bandwagon. Yes, that is clearly the advice that staff should follow for the right reasons.

Contingent workers are becoming the norm in the US. It is estimated that 50% of the workforce will be contingent workers by 2020. The trend is that there will be fewer full time employees and most workers will be self-employed and have multiple clients to make a full week. Workers have nothing to lose by going out on their own and potentially a lot to gain. Will everyone win the lottery by selling their company? Of course not, but we should look at business ownership for what it is.

When a startup is acqui-hired, there are assets other than the people that are transferred. These assets could be servers, and patents among other things. The buyer is getting a complete company as part of the deal. The technology may be integrated into the buyer’s offerings or it may simply be shut down. In the latter case it is clear that the acqui-hire was purely for the talent and not the technology; however, the assets still have value and can remain on the buyer’s balance sheet continuing to add value.

A commodity small business such as book keeping or project management is less likely to have patents, lots of source code, and tons of servers. That does not diminish the value of what they have to offer. The value of the owner’s investment is different, but not less. Most small businesses will not have an early exit strategy. Instead they become lifestyle businesses that will maintain the founder for many years.

When starting a small business, the founder must consider what the exit strategy (if any) will be. A business is a form of investment in terms of time and capital. Since a business is an investment we should consider the various types of investments in one’s time to illustrate the various value propositions.

  • Employee – employees can be seen as investment-grade bonds. Investment-grade such as high rated corporate or certain government bonds are considered a safe investment for the long-term. They tend to pay very little interest, but it is unlikely that the investor will lose their capital. Working at a traditional day job is a low risk opportunity because the employee has little to no capital invested in the business.
  • Commodity Business Owner – this class of worker represents the next and most common step in entrepreneurship. They can be seen as high yield bonds. High yield bonds do pay more, but they have a higher probability of losing money. This represents the higher professional rate that a commodity business owner can charge. The downside is there is volatility risk such as lack of steady work that the Employee (investment grade bond) does not face. There is also the possibility that the investment in the high yield bonds could be worth less than the initial investment. This would occur where the business fails and is worth cents on the dollar in liquidation when the owner shuts down.
  • Acqui-Hire Business Owner – the acqui-hire business owner invests time and energy with the expectation that the sale of valuation will increase in the future. The acqui-hire is like an equity investment. The value is based on the appreciation of the asset and the expectation that someone will pay more in the future than the previous investor.

Most entrepreneurs will set out to be the commodity business owner. While it does not have the safety and routine of being an employee, it does have the potential to be a medium to long term investment in one’s time and energy. In the world of bonds this is referred to as the hunt for yield. All things being equal, an investor will sell a bond and replace it in a portfolio with a bond that pays a higher yield. A commodity business owner will replace lower paying customers with higher-paying customers. It does lack the excitement of being an acqui-hire, which is the equivalent of seeing a stock portfolio double, triple, or more. On the other hand it can be the best of both worlds in terms of having an easy to manage investment strategy.

Leaking Is Not As Bad As Hacking

Booz Allen Hamilton (BAH) is getting slammed according to Business Insider.   BAH was down 5% at most according to some news outlets.  Buyers quickly stepped in and propped up the stock and it’s hovering at around -3.5% on the day.  

BAH has lost 5% while EMC and Lockheed lost 10% before buyers stepped in. We can conclude that leaking is only half as bad as being hacked.  This should be a lesson to all Public Relations teams.  Use the term leak, not data breach.