Do You Have A High Functioning Information Technology Organization?

One of the benefits of my job is that I get to meet with lots of people in Information Technology (IT). Recently I met with a client who told me that his IT organization was “high functioning” and that got me to thinking:
“What is does a high functioning IT organization look like?”

information_technology_matrix_people

All IT organizations need to balance three mandates:

  • Providing Business Value
  • Managing Cost
  • Mitigating Risk

The first mandate, Providing Business Value, is the most important. IT organizations that do not provide business value to the company will eventually become irrelevant: either the business will find another way to meet its IT needs or it will fail.

These three mandates are usually in conflict. For example, providing the absolute best high availability solution may be impractically expensive or may slow application performance to unacceptable levels. A high performing IT organization consistently focuses on providing business value while managing cost and risk.

Organizational Indicators of High Performance

When evaluating an IT organization, one of the biggest clues I look for is management silos. IT organizations that have a relatively flat structure and report to a single executive tend to be more efficient and flexible. These types of IT organizations also tend to make better technology decisions because they can pick the right technology for a particular task without the need to defend a particular technology turf. Clients who develop applications in-house can extend this flat structure to include application development as part of a DevOps implementation.

On the other hand, an IT organization that has multiple senior managers such as a VP of Operations, a VP of Storage, a VP of Mainframe, etc., usually produces an IT organization that has trouble working together. This inefficiency is the natural result of the friction caused by each team optimizing their operation for the benefit of that specific team and not for the overall business.

In extreme cases, I have seen IT organizations incapacitated because of management silos. For example, I met one team that waited six months for a single new IP address!

Providing Business Value

Information technology organizations provide business value by delivering the technology that supports the core functions of the business. IT should evaluate all policies, procedures and practices against the mandate to provide business value. IT organizations that prioritize providing business value above all other mandates will also usually end up being more efficient.

A high functioning IT organization can respond quickly to requests for new service, are responsive and accessible to end users, proactively plan for problems and respond quickly (ideally before) a problem impacts business operations. High functioning IT organizations exhibit ownership of the workloads they support and have strong relationships with their end clients.

Nobody sets out to provide poor business value but it happens anyway. Why? Usually it is because the IT organization thinks other than providing business value.

One of the big problems is that it can be difficult to measure how well IT is delivering business value. There are a number of academic approaches to quantifying the value of information technology to the business but those methods do require effort. The key is not to get into the downward spiral of evaluating IT investments only in terms of a single metric such as expense.

It is even harder to measure the impact of IT not providing a service or doing it poorly. I once did an analysis for a CIO that concluded that the business was wasting about 10% of its productivity on “shadow IT”. People in the business were spending a lot of time informally supporting each other or “living with” IT problems. The employees would do just about anything to avoid contacting their poorly performing IT help desk. That 10% was the equivalent of 100 people over a year.

Unfortunately, the expense of lost productivity did not appear on any accounting ledger but the expense to staff an effective help desk did. As a result, the IT organization chose to spend minimally on their help desk even though that decision cost the company much more in lost productivity than they saved in staff costs.

Managing Cost

Despite decades of talk about the strategic value of Information Technology, most IT organizations are still treated as cost centers. The pressure to minimize IT expense drives all aspects of IT from staffing, to capital equipment costs, to software selection.

Of course, the IT organization does not exist in a vacuum—IT gets “help” managing expense from the business financial organization. The successful IT organization can express the true costs of providing a service in business terms that their financial colleagues can understand.

An important aspect of managing IT expense today is the use of virtualization to consolidate workloads. Consolidation reduces costs by allowing you to use resources more effectively though increasing utilization. The mainframe people figured this out thirty years ago, but it still does not get the amount of attention it deserves.

By its nature, managing consolidated workloads is more complex that running a single workload or a small group of workloads on a server. Consolidation requires discipline in areas such as capacity planning that seem hard to justify when you can buy a small server for a few thousand dollars.

High functioning IT organizations look at the total expense for supporting a workload that includes capital, operational, energy, floor space and software expenses. When you add up all those things, a “cheap” server is often much more expensive than adding an incremental workload on a larger consolidated server.

Standardization is another important contributor to efficient and cost effective IT management. IT shops that have multiple levels of operating systems and application software will spend considerably more on operational management and will typically be less able to consolidate workloads. You must be careful not to sacrifice flexibility on the altar of standardization—no artisan has a tool bag filled only with hammers.

Managing Risk

Another important indicator of a high functioning IT organization is how they manage risk. Commonly recognized IT risks including maintaining availability, providing for disaster recovery, managing performance, and insuring security.

High functioning IT organizations manage those risks and also plan for growth, manage technology lifecycles, provide skills development, cross train, maintain sufficient depth of skilled personnel, keep abreast of technology trends, and most importantly, maintain effective communications with their stakeholders so that they can understand the business drivers that affect IT requirements.

A high functioning IT organization is able to take action to manage an acceptable level of risk while providing business value and managing costs. Appropriate risk management should include things like regular updates to keep software current, change management processes that allow the IT organization to respond quickly to requests, and a guarded approach to exploiting new technology.

Avoid establishing risk avoidance policies in an immediate response to a problem. These type of policies may satisfy the need to “do something” but may result in inflexibility and even higher risk. For example, a client who experienced a problem after installing a software update may be reluctant to install subsequent updates, even though installing those updates would close known security vulnerabilities and avoid known problems.

IT organizations should periodically review their change management and other risk avoidance processes to insure that the impact to providing business value caused by these polices is less than the impact of avoided risk. Excessive bureaucracy, particularly slow and inflexible change management processes, can paralyze an IT organization and make it impossible to support the requirements of the business.

Summary

A high functioning IT organization needs to do many things well to succeed, but a low functioning IT organization only needs to do a few things poorly to be ineffective.

The single key factor to being a high functioning IT organization is to focus on the value to the business. Evaluate how every action, policy and process provides value to the business. Limit activity that does not contribute to the success of the business. Make reasonable decisions concerning protection from risk and managing costs.

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About Jay Kruemcke

Jay has had more than twenty years of experience in the information technology industry. Starting from a rather humble beginning at IBM, Jay became a mainframe systems support programmer. Eventually Jay joined the AIX operating systems development team early in that product's development. Jay leveraged technical skills that he built in systems management to establish himself as a member of the IBM Austin Executive Briefing Center. His expertise in systems management with the SAP ERP system enabled his first product management role, as the owner of the Tivoli management product for SAP. Over the next three years he established that product as a success with the help of a strong development team. Jay returned to AIX in a product management position initially focusing on managing new requirements for the AIX operating system. Jay established himself as a subject manager expert in AIX and Power Systems virtualization and became a frequent guest at conferences around the world. Jay succumbed to the dark side and spent four years in IBM marketing in which he introduced AIX version 6 and AIX version 7 and many product innovations including the first every open beta program for an AIX release and a significant restructuring of the AIX offering structure and prices. Jay was part of the cloud software development organization and and focused on managing development engagements for clients deploying clouds using Power Systems servers with PowerVC and related products. In March of 2016, Jay retired from IBM and started in a new role as a product manager for SUSE, the Open Software company. Jay new focus is on enterprise Linux for POWER and ARM processor based systems. The postings on this site solely reflect the personal views of the author and do not necessarily represent the views, positions, strategies or opinions of my employer. Follow me on twitter @mr_sles, @cloudrancher and @chromeaix.
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One Response to Do You Have A High Functioning Information Technology Organization?

  1. Fran Medina says:

    Many times I have felt the same, IT several steps behind the market friction necessary to get competitive responses, even prepare audits. There are several models to manage the effectiveness and everything becomes more complex to include risk, as you say, we have COBIT and CMMI, and agile developments schemes on the other side. What is important perhaps is how all is intertwined. I just wrote something in the direction that you explain: http://franmedina0.blogspot.com.es/2014/07/resolutive-framework-vision-management-agile-cmmi.html
    Regards

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