Category Archives: Technology

Data Breach Response Planning Part I


Today’s guest post is from Torey Guingrich, a Project Manager at Source One Management Services, LLC who specializes in helping global companies drive greater value from their IT and Telecommunications investments.

It seems as if no industry or company can escape the potential of a data breach. Over the past few years, we have seen large retailers, health insurance companies, financial services firms, and the U.S. federal government deal with reporting and responding to large-scale data breaches. The first reaction to the threat of a breach is to bolster prevention. While there are clear ways that companies can mitigate the risk of a breach, there will always be someone looking to exploit weaknesses in security systems and protocol. While preventing a breach would be ideal, prevention should work hand-in-hand with preparation for a breach, including having the necessary partners identified or in place to respond to, cease, and mitigate damage. Procurement plays a key role in preparation by working with IT and various stakeholders to determine which types of services are needed for a data breach, as well as supporting the selection and management of the specific suppliers.

There are a few key supplier partners that Procurement should look to establish relationships with in preparation for, or in the event of, a breach:

  • Forensic IT
    While your IT department is very familiar with the systems in place and is able to manage them, they may not have the expertise needed to identify the source of a breach. Forensic IT firms can help identify the source and extent of a breach so that your IT team can focus on securing against the breach and ensuring operations can return to working condition. Procurement should work with IT to evaluate potential suppliers for forensic services based on the organization’s architecture, network, and potential entry points and vulnerabilities. Procurement can look to leverage sourcing activities or existing relationships for IT managed services to identify potential suppliers for forensic IT services.
  • Outside Council
    Unless your internal legal team is well versed and qualified to respond to a breach, you will likely need to bring in additional resources with specific expertise to direct your company on compliance and regulatory implications. When evaluating potential legal firms, Procurement should look for those who have expertise in notification requirements in all fifty states of the U.S. as well as in other countries, as appropriate for the company’s operations, and in your company’s specific vertical (e.g. healthcare, banking, insurance). Because these requirements are evolving, be sure to identify firms that are keeping pace with the most recent rulings and regulations.
  • Credit Monitoring/Identity Theft Repair
    With the increase of cyber threats and attacks over the past few years, firms that used to be seen primarily as credit monitoring tools are leveraging their experience and insight to offer response services that include customer notifications and call centre support, along with credit monitoring and identity theft repair services for affected customers. Procurement should ensure the chosen supplier is able to meet the expertise and capacity needs of the organization and can offer value-add services to bolster your response plan. Some suppliers offer services such as data breach simulations that can help identify holes or potential gaps in the designed response plan.

Procurement will need to consider the best-fit way to contract these services in order to utilize them in an efficient way. These services can be contracted in advance of a breach; this approach guarantees capacity, provides a faster response, but comes with both a monthly or annual retainer and variable costs that correspond with the breach.

You can also looks to purchase these services when a breach occurs; this would eliminate the retainer portion of costs, but would not guarantee capacity, may put you in a less favourable position in terms of negotiating variable rates, and will have a longer lead time. If you chose not to retain services, it would be prudent to establish beforehand a short-list of potential suppliers to approach for the necessary services when breach occurs.

Another option to obtain these service is through a data breach insurance plan; this is certainly an option for many organizations, but do consider your company’s ability to fully develop a response plan, ability to control the response, and reputation risk when working within the confines of an insurance policy. Deciding which services are used, and how they are purchased, will likely depend on your organization’s aptitude for risk and budget that can be allocated to these services. Procurement will need to explore the different purchasing methods against the risks associated with a data breach to determine the appropriate approach for securing these services for the organization.

Whatever supplier partners you decide to work with (whether proactively or reactively) Procurement should identify what they will need to begin working on your behalf and mobilize as quickly as possible. The development of your data breach response plan should also identify the types of data at risk (i.e. beyond customer data) and how a breach of that data will affect your business. This practice will allow you to identify business areas that may need to be involved in the creation and execution of the response plan in order to properly prompt internal action as you engage suppliers.

Now that you have your response partnership (plan)s in place, in our next post we will discuss the next key to a successful data breach response.

Thanks, Torey.

How Do You Value Cloud Services?

The clouds are here to stay. Whether they are dark nimbostratus storm clouds filled with hail or fluffy white cumulus clouds that dot the clear blue skies, they’re here. (That’s why the doctor recently co-authored a series over on Spend Matters Plus with the prophet on Supply Chains in the cloud.) Regardless of the doctor‘s opinion on whether your supply chain should be in the cloud, the clouds are sweeping supply chains up and the situation has to be addressed. (Thus, one has to do one’s best to insure that one’s supply chain is in the way of the right cloud.)

And while you should be well aware by now of how to cost a cloud-based platform, and compare it to a hosted ASP solution and an on-premise solution (as the referenced series and a number of posts here on SI have addressed this issue in detail in the past and even provided you with spreadsheet templates), you might not be aware of how to value a cloud-based solution.

When it comes to the cloud, valuation is a very difficult concept. There’s the hardware infrastructure and the reliability that comes from multiple locations that can store your data and run your applications. There’s the cloud-OS layer that handles real-time on-site and off-site data replication and back-up, automatic start-up of new processes and machines when a process or machine fails or becomes unavailable, automatic allocation of more processors and memory and storage when usage spikes, and so on. There’s the application layer that not only enables your processes but that is accessible anywhere with a data signal on any device your people happen to be carrying, that supports real-time data sharing and collaboration with your supply chain partners, and that supports innovative new capabilities not possible in on-premise apps.

There is a lot of value in each of these layers. Access to more hardware than you need, or can even afford, is valuable. Real-time off-site backup and failover is valuable too – compared to having to manually bring up an off-site location. And a better application with more capability and innovation is valuable too, but just how valuable?

In the traditional hardware world, the cost of filling a data centre is the cost of hardware plus the cost of a network engineer setting it up. Hardware is the cost of production plus a fair margin – there are enough essentially equivalent providers that costs are kept in check.

In the traditional software world, the cost of software is generally computed as the overhead cost of the company that produces it plus a margin that will produce an acceptable margin that the company can get away with based upon the perceived value differential between it and its competition that it can sell.

But the cloud is not set in the traditional world. In fact, the real-tine off-site backup and failover in a virtual OS layer didn’t even exist before the cloud. How much more valuable is having access to as many machines as is needed to power your application at full capacity at all times? While this power is known, failure — be it machine failure, power failure, or communication line failure — cannot be predicted and sometimes the entire application infrastructure must be ported in real time to a different part of the cloud.

And how much more valuable is having software that is maintained and regularly updated by the provider as compared to having software that must be manually updated and kept up by in-house development staff? Especially when that software might be capable of offering more real-time collaboration, real-time product tracking, market intelligence, and analytics than an on-premise platform. This is a much harder question to answer.

But one that should be asked. Just because a cloud solution is the cheapest alternative, that doesn’t mean that you are getting the full value you could be from your money. There are multiple providers, and they won’t all charge the same. Plus, if the technology is relatively simple, if its implemented as a true multi-tenant cloud based platform, and it doesn’t need to be updated very often to meet your needs, then the platform likely doesn’t cost the provider very much and may not have the value the provider claims if another provider offers essentially the same platform for three quarters of the cost.

There are no good answers here, but the questions should be asked and good answers should be expected before you commit to a solution, even if you are a non-profit that was donated a certain amount of cloud services — because you might not be getting what you think and may get hit with a big bill at the end of the year if your acceptance entails an agreement to pay for any usage above the donated amount of services.

Since there are no standards, providers are more or less free to “Value” services anyway they want, make extravagant claims as to support costs, and value a service at 5X its cost, or more. So be careful.

Contract Lifecycle Management 2015 (Consolidated Links)

Contract Lifecycle Management — Do You Have Your Platform and Process in Place?

By now you should, especially since 8 parts of the doctor‘s and the maverick‘s series on Contract Lifecycle Management (CLM) have been up for your reading pleasure over on Spend Matters Plus (registration required) since October, but if you don’t yet have it in place, now’s a good time to review the current series end-to-end and get a grip on what your platform should contain.

While contract management is not new, and many first generation platforms have been including contract management modules since the late noughts, many features of next generation contract management platforms are reasonably new, and some are much more valuable than others. That’s why the focus of this series was on must-haves, should-haves, and nice-to-haves for contract management platforms since it’s almost impossible to implement a good process without a good platform, and selecting one is becoming harder and harder as more and more e-Sourcing and C(L)M providers, including those who started in the Sales / Legal space, hit the market, and not all are created equal (or anything close to equal).

For example, while a clause library is only a should-have capability and multi-tier contract management and drafting a nice to have capability, especially for a Procurement Organization that does fairly standard direct materials and indirect services contracts, some CLM providers will push them as essential (which they may be for Legal organizations that handle commercial [building] development contracts with a lot of work being outsourced to specialist providers) for every organization, this is not the case and for some organizations these features will not be used at all. Similarly, some CLM providers without native MDM integration (which is a should-have) and, gasp, expiry and renewal management (a must-have) will try to down-sell their importance, which is critical in an organization with a lot of auto-renew evergreen contracts (which can cost the result in the organization overspending by 10% or more on multi-million category) and price data in third party systems.

Plus, with so many e-Sourcing technologies, and a plethora of acronyms which mean similar, but not the same, things (for instance, do you know the difference between S2S, S2P, and P2P — don’t fib!), it’s hard to tell where CLM even fits, why you need it, and the extent of capabilities your organization is missing out on with an outdated system. (This is critical as good CLM can result in significant year-over-year cost savings. While the percentages aren’t as high as supplier relationship management, spend analysis, or strategic sourcing decision optimization (which can tops out at an average year-over-year cost savings of 12% in the last case), annual savings from an effective end-to-end CLM process, backed up by the right platform, have been known to generate 4% to 6% savings that go straight to the bottom line (and get Procurement credibility with Legal and Sales, who can all be on the same system), and that’s nothing to scoff at!

CLM is critical as good contract management, coupled with good supplier management, is what ensures that the sourcing plan is realized, and this is key to capturing the savings that Supply Management works so hard to negotiate. It’s pointless to negotiate a 10% savings if only 6% of it gets captured due to bad contract management practices (which result in poor supplier management, maverick spend, inferior order management, expedited shipment, lost credits, etc.). And this is the case in many organizations without good contract management practices. (And has been for many years, as chronicled in AMR’s (now Gartner’s) classic series on “Reaching Sourcing Excellence”.)

In other words, if you haven’t, you really should read the Series to Date on Spend Matters (membership required):

  • Part    I: An Introduction
  • Part   II: The CLM Platform Model
  • Part  III: The Upstream and Downstream Phases
  • Part   IV: The Traditional Solutions
  • Part    V: The Core CLM Solution
  • Part   VI: The Standard CLM Platform
  • Part  VII: The Extended CLM Platform
  • Part VIII: The Importance of Being Earnest Integrated

Thirty Years Ago Today …

The first meeting of the IETF, the Internet Engineering Task Force, took place. While not many people know about the IETF anymore, this is a very important body as it not only develops and promotes voluntary Internet standards, but it developed and promoted the standards that effectively created the internet, including the internet protocol suite and the TCP/IP stack.

While it started out with support from the U.S. federal government, it has operated as a standards development organization under the guidance of the non-profit Internet Society. While development of new standards are slow, as it uses a rough consensus guidelines and has to interact with a number of other global organizations and standards bodies, it continues to make progress and is a leading force behind IPv6, which is desperately needed if organizations continue to insist we need an “internet of things” on the global “cloud”. (We don’t, but you can’t stop the marketing madmen.)

The internet that we depend upon daily didn’t just happen by magic, it took the hard work and dedication of a number of organizations. The IETF was one of these organizations, and the internet might not have happened without it.