Review and System Analysis of World Class IT by Peter A. High

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: 

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: 

     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).

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.

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.

 
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?

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!

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. 

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.

Hapeman also discussed information flow within his department.  A particularly touchy subject was the concept of cubicles.  Hapeman’s office was situated near the entrance of the IT department.  The majority of his staff worked in a shared common space separated by partitions.  Hapeman weighed the pros and cons of the situation:  

     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.

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?

Perception was reality when ICT partnerships were examined.  Hapeman provided ORP with World Class IT.     

References

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,