IT tier-level support, chargebacks, called wasteful

With their budgets seeing little increase, IT managers are being urged by Gartner Inc. to reexamine many of their long-followed IT practices and then, quite simply, kill them .

Among the practices that can be axed is escalating support calls up multiple tiers until they reach the developers who built the app, which is largely a waste of development time, according to Gartner analysts at the research firm’s Symposium/ITxpo here.

Does ending tier support make sense? It might, said Jonathan Silber, chief enterprise architect at a company he didn’t want identified.

Occasionally, Silber said, you run into something that is “fundamentally broken” and a technician needs to be brought in to fix it, “but that should be a much more rare experience,” he said.

What happens now is that if the help desk doesn’t have a pre-programmed response, the problem “gets forwarded out to everybody from my architecture team to every programmer,” Silber said.

Changing that process would mean shifting more dollars to a support organization instead of burying that cost as part of the salary of a senior developer, but “it becomes a specific line item that is harder to justify,” said Silber. Help desk calls have been rising generally.

Another change recommended by Gartner analyst Ken McGee is eliminating chargebacks, which amounts to billing business users for the IT resources they consume. Managing chargebacks takes up a significant amount of IT time for tracking what amounts to a small percentage of company revenue, he said.

An IT manager who agreed with McGee’s recommendation is Ron Adkison, manager of information and database services at a financial services firm.

“You’re not making any money at it and you’re wasting resources,” said Adkison, of chargebacks. “I don’t see any benefit in it,” he said.

During his presentation, McGee listed 16 ideas for trimming costs and getting a better idea of how money is being spent by an IT organization.

A conference theme of “creative destruction,” has been adopted, in part, because of a belief that a second recession is imminent.

“Let’s kill stuff here,” said McGee, who believes the impending economic period will give IT managers an opportunity to make significant changes.

Here are McGee’s recommendations:

1. Measure IT projects against the CEO’s priorities and see if they match.

2. Look at how the company makes money and compare that to the projects that IT is working on, and terminate support of projects that will not improve the income statement.

3. Abandon CIO priorities that do not directly support the CEO’s priorities. The CEO’s priorities are predominately revenue-related, where CIO priorities are mostly cost-related. An example might be a CIO who is focused on improving technical infrastructure, versus a CEO who has set a priority of being more open and collaborative with customers. McGee’s advice is “to end those discrepancies.”

4. and 5. These two are combined: Stop recommending IT mega projects. “You don’t have the money,” McGee said. Instead, discover the weaknesses in the existing portfolio and where investment is needed, he said.

6. Make people accountable for IT spending. Have business units acknowledge, with a signature, the ongoing cost of an IT service they need.

7. Terminate applications that aren’t delivering value. Gartner estimates that operating expenses can be reduced by 20% by 2014 by decommissioning applications.

8. Stop the practice of putting all enterprise spending within the CIO’s budget. It obscures the IT cost of business units. “The CIO ends up being a pinata for the entire organization,” McGee said.

9. IT organizations need to create processes that prevent “surprises,” which disrupt the business model. McGee introduced this point by showing the cover page of the Borders Group bankruptcy filing. It took that company three years to respond to Amazon’s Kindle, he said.

10. Eradicate ” cloud -a-phobia.” The number of organizations that will deliver 100% of their IT services internally is over, said McGee, but there remains a stalling phenomenon.

11. Abandon level 1, 2 and 3 tech support, where the more complex the problem the higher the skill level sought to address it until it reaches the people who built it. Calling a high level of support is like calling an automaker to pull the person from the assembly line who built the part to fix the problem. “This is what we do every single day in IT,” McGee said. Most application staffs are oversized to compensate for the interruptions, and operations staffs are undersized because of their co-dependency.

12. Cancel most IT chargeback systems, which take an extraordinary amount of effort and expense to charge back what is a small amount of revenue.

13. Stop seeking competitive bids. Most companies keep their existing vendor. “The number of people who absolutely terminate their network services contract, for example, and go to a new carrier is a very small universe,” McGee said. The multi-step RFP (request for proposal) process is ineffective and time consuming. Instead, users should reach out to a consulting firm or to their peers for insights into the competitive landscape.

14. Stop holding onto unfunded projects and send them back.

15. End discrimination against behavioral skills and social sciences. Social networks and contextual computing will require training and people with new skills to augment IT skills.

16. Abandon IT’s unbalanced support between the front and back office, which might lead to a “back office CIO” and a “front office CIO.”

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Jim Love, Chief Content Officer, IT World Canada

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