The skills and behavior of individuals make a big difference in how IT performs, but an IT organization that also...
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makes broad changes in its own processes can dramatically improve its output. Here are some thoughts on where to look for opportunities.
Follow the money -- costs: If you can find ways to lower the costs of an operation, you can often improve the quality and speed of that operation at the same time -- that is, if you really redesign the process and not just reduce head count. Too many managers believe that just laying off people improves efficiency. Head count reductions usually save money, but if that's all you do, there are often too few people left to get the work done.
Looking at where and how money gets spent may point you to where productivity improvements will have the highest payoff. For example, many IT organizations spend more money on the maintenance of old systems than the development of new ones. A typical IT budget dedicates 40% to current system enhancement and maintenance costs, 40% to infrastructure costs (e.g., data centers, help desks, networks), and 20% to the development of wholly new systems. The problem with this kind of resource allocation is that new systems provide the best opportunity for improving the performance of the business but get the least amount of money.
One simple prescription for increasing IT productivity is to change processes and structures to spend less on infrastructure, freeze or reduce spending on current systems and invest more in the new one.
Follow the money -- capital: You can improve an IT organization's ROI by increasing returns or lowering invested capital. So consider running your IT organization on less capital. Could you share facilities or capabilities with another company? Could you reduce the need for capital by outsourcing or offshoring parts of your operation? Could you consolidate your operations into a single facility, or fewer facilities? I have seen some companies with hundreds of different help desks and multiple data centers. These are rich opportunities for improving the productivity of your capital.
Chart breakdowns: If you carefully observe and record where breakdowns occur -- systems fail, projects get delivered late, work has to be redone -- you can identify processes that can benefit from real reengineering. Work that delivers no value, or creates headaches with customers, only lowers productivity. But fixing broken processes requires stepping back and redesigning work with a "clean sheet of paper." If you take an incremental approach, just tinkering with how you now do your work, you will get incremental productivity improvement. If you want to increase productivity dramatically, set very ambitious goals -- like redesigning your work so that there are no breakdowns and zero defects.
Fish upstream: Many decisions that affect the productivity of IT organizations are made outside of IT, elsewhere in the company. This is particularly true of decisions related to the design of very large systems, especially ERP systems. Installing a family of ERP products can require hundreds, if not thousands, of decisions by line managers. The more IT professionals collaborate -- and influence -- these decisions, the more quickly an ERP system is implemented and more efficiently maintained. So, go upstream and participate when these decisions are being made.
Reject customization: When given the opportunity, line managers will reject the standard capabilities offered in ERP packages and will argue for customized applications or reports -- without knowledge of what customization costs in both time and money. The argument for customization is usually that the company does its business in some unique way. Push back on this argument, especially if you're implementing administrative processes in finance, accounting or human resource management. These processes need not be unique by company.
And remember, the hidden inefficiency in customization is in maintenance -- the time and costs required customizing every new release of an ERP software package.
In addition to these ideas, there are productivity tools available to improve the output of both individuals and IT organizations. Many of these tools are technology-based and operate at all levels of IT work -- process design, system architecture, automated coding, server and network optimization, project management and program management. A good IT shop assesses and selects these tools carefully. But a great IT shop recognizes that these tools won't accomplish very much if its basic operating processes are broken or inadequate. So start by following the money, charting breakdowns and fishing upstream.
James Champy is chairman of Perot Systems Corp.'s consulting practice and head of strategy for the company. He is also the author of the best-selling books Reengineering the Corporation, Reengineering Management, The Arc of Ambition and X-Engineering the Corporation.