Review and System Analysis of World Class IT by Peter A. High
Books; Essays; Prose Tuesday, September 04, 2012
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Last updated November 14th, 2013 by Steven Jordan.
Abstract: The following is an analysis of Peter A. High's, World Class IT. High's paradigm of Partnerships with IT and Business, is explored via Q&A.
“Perception is reality”, began Tim Hapeman, IT Director for Oconomowoc
Residential Programs (ORP), in regard to IT’s unique mission as a communicative
hub. Hapeman was the focus of a recent
interview; based on ensuring partnerships within the IT department and with the
business. The topic was borrowed from
Peter A. High’s book, World Class IT (2009), and his sub-principle’s in Chapter
5.
ORP provides group homes, work opportunities, and educational services
for people with mental disabilities.
They are a $100 Million dollar company and have locations across the
Midwest. The IT department services over
100 locations and provides network services for over 2000 employees.
Hapeman has been with ORP for almost 2 years. He previously worked for Goodwill Industries,
as the Manager of Information Technology, and Leprino Foods, as their System
and Security Supervisor. Hapeman has a
bachelor in Mathematics from Michigan State University, as well as a graduate
degree in Computer Information Technology from Regis University in Denver,
Colorado.
The 5 Sub Principles of Partnership with IT and Business.
High, (2009, p103)
1. Communicate Well with the Business.High argued communication is a bridge between
business and IT. Hapeman was asked how
well his IT department communicated their successes and failures to the rest of
the operating companies. Hapeman
replied:
The failures part is interesting. We’re pretty up front, as you know, if we have an issue. If a system is down, or if it’s something we need to address, we say we’re working on it.
I would say to some degree we do. I create monthly reports which end up being
parsed and put into the COO report that go to directors (and staff throughout
the company.) Terry (ORP’s COO)
publishes everything I send him, with a few exceptions, things I mark as
confidential.
The failures part is interesting. We’re pretty up front, as you know, if we have an issue. If a system is down, or if it’s something we need to address, we say we’re working on it.
Hapeman provided a recent example of how the
IT department provided consistent updates for a server problem. The company’s SIP trunk server, which
supported telephony services, was down.
Hapeman explained:
High also wrote about the importance of interdepartmental communication opportunities. Hapeman shared his opinion on that:
An important point to High’s first sub-principle was to have a business minded staff. Hapeman was asked how well the IT staff understood the other business departments. Hapeman’s thoughts:
I was pretty open, especially up the chain,
as to what was going on; and it wasn’t anything we were hiding. I think it’s important because, not that
it’s fun to share your failures, but most likely it’s going to come out in the
end. You may as well be ahead of the
curve. It gives people an opportunity to
show them what you are doing to fix it.
I think people appreciate that.
High also wrote about the importance of interdepartmental communication opportunities. Hapeman shared his opinion on that:
I
don’t want to be just a middle man that
passes information back and forth; without adding value. I want my team to understand that I trust
they will have good communication.
An important point to High’s first sub-principle was to have a business minded staff. Hapeman was asked how well the IT staff understood the other business departments. Hapeman’s thoughts:
Since I’ve started, I think it’s good that
Terry shares his COO monthly report. It
gives good highlights on what the other companies are doing. What opportunities did you see in there that
maybe we’ve missed?
As far as other departments understanding us… I’ve had opportunities to talk about IT at the directors meetings. It’s an opportunity but I don’t think a lot of that information gets passed beyond the director meetings. It’s something Terry is pushing me for (to change).
As far as other departments understanding us… I’ve had opportunities to talk about IT at the directors meetings. It’s an opportunity but I don’t think a lot of that information gets passed beyond the director meetings. It’s something Terry is pushing me for (to change).
2. Align IT with the Business’s Strategy.
High’s second sub-principle involved IT alignment with business strategy by the
budget, projects, and evaluation processes.
When asked about ORP, and its IT business strategy, Hapeman replied:
This year the company has published a 2012 core priorities. We’ve been walking through the core priorities as a department each week.
This year the company has published a 2012 core priorities. We’ve been walking through the core priorities as a department each week.
Hapeman explained the 5 core priorities:
1. Quantify your quality.
2. Increase Revenue.
3. Engage and energize your employee owners.
4. Press forward with public policy.
5. Streamline the organization.
2. Increase Revenue.
3. Engage and energize your employee owners.
4. Press forward with public policy.
5. Streamline the organization.
Hapeman expanded on the core priorities:
We’ve talked about what it means to be part
of an Employee Owned Stock Program. What
it means for open book management and the great game of business. I’m taking something that was generated by
upper management, and we’re going through it, and I’m taking notes, and putting
it on SharePoint.
This is how IS sees our role in the core priorities. How do we accomplish what we need to? How do we meet these core priorities? If what you’re doing cannot be categorized as one of these 5 core priorities, you have to question yourself, why am I doing that? If it doesn’t accomplish something with the core priorities, should we be doing it at all?
This is how IS sees our role in the core priorities. How do we accomplish what we need to? How do we meet these core priorities? If what you’re doing cannot be categorized as one of these 5 core priorities, you have to question yourself, why am I doing that? If it doesn’t accomplish something with the core priorities, should we be doing it at all?
Hapeman began to publish help desk metrics in response to the “quantify your quality” priority. Increasing revenue was a bit more challenging. High argued that IT should align their budget with the business, but how could a non-revenue department demonstrate value? Hapeman’s take:
When we talk about adding to the bottom line, and contributing to the margin by IS, we’re not (considered) a revenue driven center. I’ve always dismissed that.
Hapeman introduced the concept of revenue equivalency. Revenue equivalency is the opportunity cost of lost revenue when compared to the businesses’ profit margin. Hapeman explained that after all the bills were paid, there was about a 5% profit margin on every dollar brought in:
ORP Budget
|
|
|
Wages & Benefits
|
$0.60
|
|
Expenses, "Stuff"
|
$0.25
|
|
Management (IT,
Accounting, HR)
|
$0.10
|
|
Margin
|
$0.05
|
Hapeman elaborated:
If you consider this, for every $1 generated,
you end up with a 5¢ profit margin. $1 million in new revenue translates to $50
thousand in new margin.
What if I save $50 thousand? What if I spend less or do something more efficiently to save $50 thousand? That is a revenue equivalency of earning $1 million. I would have to bring in $1 million in new revenue in order to accomplish the same thing I did by saving $50 thousand.
By simply buying the Microsoft Academic licensing for our schools, over 3 years, we’re saving over $200 thousand. If you do the revenue equivalency of that, that’s $4 million. We would have had to of gone out and found new ways to bring in $4 million dollars; to accomplish the same thing from a margin standpoint, as we did by simply changing the way we buy licensing.
Think about that. That is powerful!
What if I save $50 thousand? What if I spend less or do something more efficiently to save $50 thousand? That is a revenue equivalency of earning $1 million. I would have to bring in $1 million in new revenue in order to accomplish the same thing I did by saving $50 thousand.
By simply buying the Microsoft Academic licensing for our schools, over 3 years, we’re saving over $200 thousand. If you do the revenue equivalency of that, that’s $4 million. We would have had to of gone out and found new ways to bring in $4 million dollars; to accomplish the same thing from a margin standpoint, as we did by simply changing the way we buy licensing.
Think about that. That is powerful!
3. Innovate
Innovation can be
any change throughout a company. It can
be procedural or technical. High
specifically wrote about the importance of alignment of innovation with
business priorities. Innovation is an
important concept within the IT department because most IT projects and
services are an innovative force.
Hapeman had a lot to say regarding innovation:
Business needs to drive IT to innovate. We need to know what their process is, what
they do, and what they expect. We can
look for innovative ways to accomplish their goals.
He provided a
recent example of innovation within ORP.
One of the operating companies, Prader-Willie Homes (PWHO), had recently
incorporated the use of netbooks for staff use at their group homes.
Netbooks were a
great fit for their staff because of their portability. Client supervision made electronic record
keeping difficult. The netbooks allowed
the staff to be near the clients, and in the common area, instead of their
office. The netbooks were also an
affordable solution and could be purchased for under $200. Hapeman explained:
There is something to be said for whoever
decided netbooks would be a good idea for PWHO (it was the interviewer). I don’t know if that was driven from IT down
or from PWHO up. At this point, now that
PWHO is doing it, we need to share it.
Spread the word through the operating companies.
On one hand it’s innovation but on the other
it’s also standardization, which is good.
The final core priority was streamlining the organization. IT is all over that. We’re totally on that.
Use of netbooks was
a good example of innovation through technology. Hapeman made a strong case for innovation
through process improvement as well:
The realization is, quite frankly, this
concept of all our independent companies operating as independent entrepreneurs
is not working. It’s not working to
leave it so unhinged and untethered.
For example you end up with different ways,
within an independent company, for buying supplies for a home. You wind up with an employee driving to
Wal-Mart to buy supplies like Kleenex or paper towels. You’ve missed an opportunity to standardize
on that. You’ve missed things like
purchase management organization involvement.
You’ve asked managers and supervisors of homes, to make judgment calls on things like, what is the best product for us to buy at our home? They’re going to do their best; sometimes they’re going to make a good decision, sometimes they won’t. We’ve accomplished a business need but at a big waste. Waste in money on the actual item. Waste in money on getting the actual item.
You’ve asked managers and supervisors of homes, to make judgment calls on things like, what is the best product for us to buy at our home? They’re going to do their best; sometimes they’re going to make a good decision, sometimes they won’t. We’ve accomplished a business need but at a big waste. Waste in money on the actual item. Waste in money on getting the actual item.
4.
Create
an IT Strategy
High explained that IT and the other business
departments should be part of the same plan.
He encouraged IT to review strategic business plans to look for cross
departmental innovation opportunities. When
Hapeman was asked if there was a similar practice at ORP, he brought up his weekly
scheduled meeting with the COO:
We talk about all kinds of things. (We’ll review) IT projects and he’ll talk
about what other departments are doing.
Things that may end up on his COO report, but before they get
there. We talk about things that may not
go on the COO report.
Hapeman also spoke freely on his thoughts to
improve the process. When asked if he
felt the IT strategy plan aligned with the strategies of the other departments,
he responded:
I would say from the knowledge that we know
from them, yes. But I would also say
that we’re not pushing the companies and asking, what is your number one
priority? What is your number two priority?
What is your specific project deadline for this specific project? We
need to do more of (that).
5.
Communication with the IT Department
High made a strong case for job rotation within the IT department to foster better communication within the IT Department. He argued that staff rotation would lead to improved understanding, dialog, innovation, and information flow. Hapeman commented on the concept:
I think it’s important, even if it’s for only
1 hour each week, that everyone in the department is scheduled to answer the
help desk phone. I know some people
disagree with that, but I feel strongly enough about it. We need to have the common interface that everyone
can work the help desk. Everyone can
answer the first line problems. It’s
minor but it’s symbolic.
When I
was at Goodwill, when I first started at Goodwill, I had an office. The last year I did not. We moved into a new building, and if you
weren’t a VP or a director, you didn’t have an office. I was thinking, oh man, this is not going to
be good (laughter). Every single day
when I sat in a cubicle, I wished I was in an office; every day with no
exception. But the benefits were
great. I was immediately in the
conversation. I was much more in the
flow. I was more strategically placed
with my network team to know what was cooking.
Hapeman also shared his thoughts on how direction is set:
I definitely nudge people. Hopefully we’re all responding to requests
from customers. I challenge people as to
why they’re doing something. This is
definitely not a department where people are saying, the only reason I’m doing
this, is because Tim told me to do this.
You know that’s not the case.
With input from our users we decide as a team. It’s not like Moses coming down with the 10
commandments and dictating word of God.
We have flexibility.
Analysis Reflection
In the IT profession, a “hub” was a standard piece of network equipment. The hub’s purpose was to add network connections and to pass along the flow of information. The end user that connected through the hub may never have seen the actual piece of equipment; but they nevertheless depended on its services to complete their daily tasks. Employees’ productivity, as well as their creativity, would be adrift without the hub to interconnect the separate departments.
In the IT profession, a “hub” was a standard piece of network equipment. The hub’s purpose was to add network connections and to pass along the flow of information. The end user that connected through the hub may never have seen the actual piece of equipment; but they nevertheless depended on its services to complete their daily tasks. Employees’ productivity, as well as their creativity, would be adrift without the hub to interconnect the separate departments.
The hub was
eventually replaced with the “switch”; a network device that provided similar
functionality but was more efficient.
Nicholas Carr (2009) argued that the Internet Utilities (Google,
Microsoft, etc...) may someday replace the typical IT department. Carr’s book was ironically named,
The Big Switch. The dilemma was similar to the difficulties faced
when defining IT’s value. Hapeman had
demonstrated IT’s monetary value with revenue equivalency. Might there be a collaborative equivalency as
well?
Hapeman’s arrival to ORP was preceded by a
brief period of perceived service problems.
The company had finished a period of large
growth and the IT department had struggled to keep up with the additional
business. Although Hapeman was placed in
the proverbial hot seat he started with a good foundation. High’s first two principles were covered:
1.
Recruit, Train, and Retain World Class IT
Employees.
2.
Build and Maintain a Robust IT
Infrastructure.
The department’s
primary weakness paired well with Hapeman’s professional strength;
communication. When communication
was properly bridged between IT and the other business units, improved
collaboration began to take root.
Hapeman explained:
Talking to people who had a perception of failure on our part, I had to ask them why they felt that way. Why are you saying that? What are we not doing?
Talking to people who had a perception of failure on our part, I had to ask them why they felt that way. Why are you saying that? What are we not doing?
Perception was
reality when ICT partnerships were
examined. Hapeman provided ORP with
World Class IT.
High, P., (2009).
World Class IT, San Francisco: Jossey-Bass.
Hapeman,
T., (personal communication, March 1st, 2012)
Carr,
N., (2008). The Big Switch, New York, NY:
W.W. Norton & Company, Inc,
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