Big IT means big productivity: Study

FRAMINGHAM – Mid-market IT shops are often jealous of big-company IT departments and their access to seemingly unlimited resources, tools and staffers. According to a new study, they’re right.

Hank Marquis, director of IT service management consulting at Enterprise Management Associates (EMA), says that an analysis of recent data trends show that IT departments in Fortune 1000 enterprises actually are more productive and effective service providers than mid-market counterparts-and it has nothing to do with the amount of staffers or money spent.

“The staff-versus-budget argument is based on a false assumption-it improperly assumes that resources committed to IT are used efficiently and effectively. However, in the majority of IT organizations, they are not,” writes Marquis in a January 2008 advisory report “Are IT Budgets Too Big?”

So how did Marquis get to this conclusion? First, he states that mid-market IT shops are in trouble. “If the average mid-market IT organization were an independent business, it would have gone out of business long ago,” Marquis writes.

A small sampling of data points that Marquis cites (gathered from EMA’s own research and from organizations such as Gartner and The Standish Group) sets off some alarms. To wit: Ninety percent of mid-market IT organizations use manual processes. Seven out of 10 calls for IT support are a direct result of incorrect operating procedures, meaning self-inflicted by the IT staff. Eight out of 10 IT system outages are caused by a failed change-meaning, an IT staffer “didn’t take the time to consider the ramifications of making a change to the infrastructure,” Marquis notes. And as much as 80 percent of the actual IT department is replicated by “shadow IT” workers in the business because IT is too busy to service their customers effectively.

To top it off, Marquis says that research from EMA and The Standish Group show that approximately 70 percent of mid-market IT projects fail.

While conventional wisdom would say that large companies’ IT shops are more effective because their company’s have deeper pockets, Marquis states that the logic is incorrect. “The common response from [mid-market] IT management to business management is the need for more staff,” he writes.

Marquis supports his argument by comparing the “user-to-IT worker” ratio in midsize and large companies. “Larger companies of the Fortune 1000 support almost three times-2.9 times, to be precise-as many users per IT staff member than mid-market companies,” he writes. The Fortune 1000 user-to-IT-worker ratio is 512 users for every one IT worker; in the mid-market, the ratio is 175-to-1. This, Marquis writes, makes “mid-market IT organizations only about one-third as effective as their larger Fortune 1000 cousins.”

“It’s not more staff that’s needed,” Marquis concludes. “Existing staff must become more productive.” Marquis concedes that larger companies most often have teams that support specific IT technologies (such as operating systems, networking and database management). Mid-market IT organizations, however, usually have a “more generalist approach with a shared team and few if any specialists,” Marquis writes. “These teams work harder and have less time to dedicate to any particular technology or specialization.”

But mid-market IT managers don’t do themselves any favors in helping this area, Marquis states, citing research that found that fewer than 20 percent of IT organizations manage their “human capital” (for example, investing in training and new skills for staff) or actively measure worker performance. In turn, this lack of staff improvement contributes to a turnover rate that can exceed 27 percent per year, “making the workplace even more chaotic and reactive,” he writes.

Marquis’s company, EMA, offers consulting services for helping mid-market companies improve IT management of business processes, so it’s not surprising that he sees this as a solution for mid-market IT shops. But what he often hears from IT staffers is a “we don’t need no stinkin’ process because we’re IT pros” mentality, Marquis says in an interview. “And all that adds to horrendous efficiency.”

And Marquis writes that inefficiency will hurt both businesses and mid-market IT shops. “IT is too busy to adopt huge [process-oriented] frameworks like ITIL, Six Sigma, CobiT or formal IT project management,” Marquis writes. “But the reason they are so busy is precisely because they have no formal processes.”

In sum, Marquis concludes that the “average IT organization is its own worst customer and responsible for most of the outages to which it finds itself reacting,” he writes. “In fact, most of the work going on in the average IT organization is not productive work at all, but rather is re-work.”

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