The Business Vs. IT
This article was written based on experiences at a previous company. I think it's such a common scenario, I wanted to get this published. Maybe I'm not the writer I thought I was because no one picked it up, so I'll just publish it here myself! If you think you're too far down the totem pole, it doesn't apply to you, there's nothing you can do, etc., you're wrong. Success is the art of changing.
The Business vs. IT 5/26/2006
I work for a typical high-tech company on a typical IT team. We’re called “Infrastructure Systems Services”. We provision and manage critical datacenter systems that are largely responsible for keeping the business running. I’m a lead on my team, I provide general direction and senior level systems engineering. Sounds pretty cool huh?
My company has evolved over the years, during which time it’s been very successful, has acquired dozens of companies, and now spans numerous offices all over the world. I work at the largest site, where about 30% of the employees are located, along with the major business units (HR, Legal, Finance, etc.).
The jobs on my team are the kinds of jobs most IT people strive to get. Here’s the problem, my team is often highly dissatisfied with their jobs and the business is often dissatisfied with my team. Why is this? Let’s look closer …
As I said, we provide “critical business systems”. So what does that mean? It’s supposed to mean that at some point the business and IT looked at a using technology to meet a business need, it was deemed that the benefit of the need outweighed the cost of the technology, IT agreed it had the resources and know-how to implement and manage the technology, and we moved forward. So, the business is now more efficient and/or offering new services or products via this technology, and IT is happily providing this important service. The company’s customers are happy with the improved service or product, the return on the investment outweighs the cost, and the shareholders and market analysts are also happy. The company’s value increases, and everybody’s happy!
So how did we get from there to where both IT resents their jobs and the business resents IT???
Let me describe another scenario. This is just as hypothetical as the first, but based on actual events.
It’s Tax season and Tom in Finance spends a whole work-week every year doing the tax filings. He also has to update the filing quarterly because it’s a publicly traded company, that takes him about a day. This is Tom’s least favorite part of his job. So, he starts to shop around for software to help him automate this manual process. He finds one, talks to the vendor, buys it, and calls up Joe in IT. Tom knows to call Joe, they’ve worked together before, and Joe is always helpful. Even when Tom has called the Help Desk, they always send him straight to Joe for “server support”, and the vendor said this should run on a server so Tom’s whole team can use it.
Tom: hey Joe, how are you? Listen, I have this really important software that needs to run on a server, can you help me? It’s tax season and I need it running really soon…
Joe: Ok, sure Tom. Does it need it’s own server, or can it run on one you already have here in the datacenter?
Tom: Oh no, they said it needs it’s own server.
Joe: Ok, well, a new server costs about $4,500
Tom: ok Joe, send me the quote and I’ll buy it and have shipped to you
So the server arrives, Joe spends a day installing it, racking it, etc. Because Tom said it’s really important, Joe also sets up regular backups, monitoring, automated patching, antivirus, etc. So what’s the problem here? Joe & Tom are both happy right? Tom saves about 1.5 weeks per year doing taxes, and it only cost him $4,500 But let’s look at the real cost of this server:
Item |
On time |
Yearly |
Server Hardware & OS |
4,500.00 |
|
Server support |
250.00 |
|
Tax software |
1,000.00 |
|
SQL software |
1,500.00 |
|
SQL maintenance |
300.00 |
|
Backup agent |
300.00 |
|
Backup maintenance |
60.00 |
|
Backup tapes |
50.00 |
|
Monitoring agent |
350.00 |
|
Monitoring maintenance |
70.00 |
|
Antivirus |
100.00 |
|
Power & Cooling |
500.00 |
|
Network & misc |
|
100.00 |
Totals |
$7,800.00 |
$1,280.00 |
Wait a minute, those numbers can’t be right, can they? What are all those maintenance costs? All enterprise class software includes yearly maintenance at about 20% of the software price, which includes 24/7 phone support, free patches and upgrades, and usually a vendor rep to make sure you’re happy.
Ok, well what about that SQL line? Well, Tom didn’t tell Joe that the Tax software uses a database. Luckily, Joe already has the software and knows how to install and configure it. However, the company must pay for using it.
So, let’s say Tom makes $70k/year. That means 1.5 weeks of his time costs the company $2,019. So over the course of 5 years, it costs $10,095 for the company to pay Tom to manually do the taxes. But with this new technology, the initial purchase plus 5 years of operating costs is $14,200. Fair enough, but over the next few years it will even out, not a big deal right? Wrong. Five years later, the server is outdated and must be upgraded. That’s at least another $4,500 every 5 years, plus the costs of maintaining the Power, Cooling, and Network equipment. Also, the tax software is outdated and must be repurchased because Tom didn’t know to buy support. The company will never break even on this deal. Multiply this situation by dozens and dozens of servers and applications and you’ve got a problem.
But it’s just a numbers problem you say, if the company is very profitable, it can take a loss here and there, right?
Now here’s the real problem: Joe and his team are spending more than half their time managing all these semi-important systems. After meetings, paperwork, phone calls, emails, etc. he’s now got very little time left for the systems the company and IT both decided were absolutely critical to running the business. The quality of those systems is diminishing. Joe can’t keep up with planning for increased capacity, keeping the systems healthy and secure, regular upgrades and maintenance, etc.
Over time the business starts to view Joe and his whole team as ineffective. They just can’t seem to keep up. Their budget has grown out of control and they’re always having to take the systems offline for some reason or another. Not to mention in a few years the current datacenter won’t be adequate, and the company will have to re-invest millions to either build a new one, or expand. Worst of all they’re either late or unable to deliver projects to implement more business-critical systems to increase profitability and customer satisfaction.
So in short, IT believes it’s delivering exactly what the business is asking for, but the business is never happy - and the business now sees IT as a very expensive roadblock to achieving it’s goals.
The real problem here is a disconnect between the business, itself, and IT. The business no longer knows what it’s employees are requesting of IT, and IT can’t differentiate between a critical business system and a nice-to-have, and is overwhelmed with the demands.
How do we fix this problem? Should we replace the IT manager? No, we’ve done that several times. Maybe the team needs more people? No, their budget is already astronomical. Maybe some people like Joe are not very efficient and should be replaced? Maybe they should be outsourced?
People
Processes
Technology
Oh! You knew I was going to through out some industry cliché, didn’t you?
People: The right people must not only have awareness of the situation, they must also care. Who are the right people? That will vary, but typically IT Directors on up to CIO, and on the business side CFOs and the like. Awareness below that level is important, but little change can be influenced.
Process: TCO. If you don’t know what the real costs are , you aren’t doing your job. Yes I mean you. Any person responsible for IT, from the sys admin up to the CIO should know this. Then a decision process should exist for determining the value of a service vs. it’s cost. No changes to the environment should be made without going through these processes. This again involves the business and IT working together.
Technology: Notice this is last on the list? My colleagues may argue “I would virtualize that server and centralize the databases, etc, etc, but you still have to pay for and manage the software, and the impact on the team’s resources is the same or worse. You simply cannot solve a people & process problem with technology. You may lessen the financial impact, but the real problems will be ever-present.
A direct line of communication between IT and the business is critical; someone on both sides who has deep understanding and visibility in to each other’s world. The IT folk should sit in on business discussions and have clear line-of-sight into the direction of the business and it’s customers. The business folk should regularly review the state of the environment, the road ahead, and the TCO. Together, they can then assess the real business value and costs of these needs, wants, and nice-to-haves.
Of course, I’m greatly over-simplifying this problem, and it’s only one among many inter-related complex problems businesses and IT shops face, the point is they must face them together.
Comments
- Anonymous
November 25, 2006
You are not only oversimplifying the problem you are greatly enhancing the chance that IT execs that have very little time to review things will actually read and comprehend the issue. It is, as you say, paramount to a business that communication happens at all levels. Expectations are the most important things to manage. People expect ceratin things to happen when they hear about a new and improved idea. Garanteed; each individual has his/her own perception of the outcome. Communicating the expectations of the business clearly will greatly reduce the misperception and failed expectations which lead to frustration, lost employee enthusiam and failed implementation. Include users at the most basic level of interface during development. THey will become the best sales people when it comes to adoption. They will also help uncover unexpected holes in the system that upper management may have never known about. This should be an on going process, software/hardware or just regular business practice. True costs are rarely uncovered until after the the systems are in place even in profitable companies. More often than not, the losses never get truly known until a lean season sets in. Anyway, great article. Sticking to basics does work. - Anonymous
December 04, 2006
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