By Jeff Lucchesi
For years, IT leaders have been driving to be more relevant to the business. Usually relegated to back-office support and tucked under the domain of the CFO, breaking through this value perception has been difficult.
Well, times are changing rapidly and as the leader of IT, you are getting what you have been asking for. The question is, “are you ready?”
This is the new age of computing where infrastructure is more tightly coupled with the revenue side of the business. Software as service companies (SaaS) or companies moving their business model to SaaS is commonplace. Infrastructure as a Service (IaaS) companies are also sprouting up and growing quickly. Your organization is now under the microscope because you are either part of the product or ARE the product and how you manage has a direct impact on product margin.
My focus today is on the infrastructure side of your world. Most of these organizations we see today are vertical, based on domain expertise. These organizations are inherently flawed because the staff supposed to be delivering high value (ie project work to scale the business, or making customer-facing improvements) are also continually being dragged into firefighting when outages and performance issues strike. The company is not getting where it needs to be because approximately 40–50% of that 6 figure salaried employee ends up doing work of someone who would be making significantly less. The organization always appears short on resources because the staff is overworked and can’t deliver critical efforts which “move the needle.” This profile will impact your ability to be competitive in the market and certainly won’t help in improving product margins.
So what needs to be different? First, the organization needs to be turned on its head, or, in this case, horizontal. All first-line support (levels 1 and 2) need to be in one organization driven by one leader who is fully accountable for the day to day support issues. This includes hitting SLA’s committed to customers, strong metric management for tracking repair and escalations, and most important, turning this level of support from a “craftsman” , tribal knowledge skillset to a manufacturing process. Identifying work efforts currently performed manually and automating them will reduce outages, makes the service more predictable, and reduces operating costs over time. Implementing a revenue per employee metric on the organization gives you insights on how the automation of work is progressing and should show progress on product margin.
If the level 1 and 2 organization is working correctly, the level 3 role is now focused on moving the company forward and having fewer day to day distractions. Partnering with the product side of the business on development, scaling the technology for growth and performing automation work for the front line support team should be the order of the day.
Another major impact on the horizontal organization is the type of employee who will work well in this structure, specifically at levels 1 and 2. Out is the person who says “ I just want to do Linux” . In order for you to continue to improve the percentage of problem resolution at this front line level, the staff needs to become multi-skilled. Investments in training will go up as you develop your employees but having them be able to perform a cross over support among the domains is crucial to driving your operating costs down and improving service levels and margin. This also improves retention and develops employees to be more productive as they graduate from production support to a higher level role as a designer or, eventually, architect.
Getting to this new organization structure is no piece of cake. It is disruptive not just for personnel, but to most of the processes currently operating in your environment. After putting together new job descriptions, you will find that many of the staff who saw themselves as engineers may end up in the front line as level 1 or 2 performers.
The other cultural change is on the automation front. Rewarding behavior for identifying opportunities or implementing automation which will reduce labor efforts is critical for the business to scale and compete. That employee needs to believe that growth in the business will actually benefit them rather than make them expendable. This is a difficult mindset to change in the organization and will take a lot of marketing time to get the team ‘on the bus.”
So concluding, if you are in the new model already, congratulations and enjoy the ride. If not, you will need to roll up your sleeves because you have some heavy lifting to do this year.