RESTRUCTURING THE IT ORGANIZATION

Presentation #343

Christian Doeringer

Netsysco LLC

9300 Shelbyville Road, Suite 1006

Louisville, KY 40222-5168

Phone: 800-888-9028

Fax: 502-327-9334

e-mail: cmd@netsysco.com

 

 

 

Introduction and Executive Summary

 

The functions of IT departments have been traditionally defined to provide the necessary computing support to the operating business departments.  Consequently, the organizational structure of the IT department and the job responsibilities of its members were designed to satisfy these needs.  Additionally, the mainframe structure of the 60s, 70s and 80s with dumb terminals and centralized computing power required a typically centralized organizational structure of the IT department.  The roles of the individual contributors were defined in detail and clearly structured.  There was little cross functionality and career paths were within specialized areas. 

 

During the 90s the development and tremendous growth of distributed systems, client-server technology, and networking has shaken the classical IT department.  The IT organizational structure and IT career paths have not kept up with these changes.  As a matter of fact, numerous HP shops look today exactly like they did 10 or 15 years ago.  Many companies have added new job titles (Network Administrator or Database Administrator) due to technical developments, but hardly made fundamental changes in their organizational structure to fully utilize the new technologies and talents of their employees. This paper discusses the impact of changing business requirements for the IT department.  The results of two surveys conducted by Netsysco in 1999 are discussed.  The surveys focused on the changes in job responsibilities for System Administrators and Database Administrators from both management and employee perspective.  Next, we discuss how the talents and passions of IT professionals can support the evolving role of IT by modifying organizational structures and career paths.  Finally, the survey findings are applied to this passion-based organizational model.  In conclusion, the importance of bench strengths and training as strategic tools are discussed.

 

Other trends in organizational development, not addressed in this paper, are decentralization vs. centralization, contractors vs. full-time staff, and telecommuting. 

 

 

Traditional IT Structure, Job Responsibilities, and Career Paths

 

Historically, IT departments were organized in accordance to other business departments.  Organization theory and history is interesting because most companies and other organizations today have the same departmental structure successful military units developed in the last century.  IT is no exception.  Based on mainframe technology with dumb terminals, the IT functions used to be centralized and well defined.  Job responsibilities and reporting structures were rigid and straight forward, and career paths one-dimensional.  The typical IT department organizational chart looked - and in many cases still looks - like this:

 

 

Technical Specialists are grouped together, headed by managers, who report directly to the IT Director.  The teams are put together based on the technical abilities of their employees and are trained to become experts in their specific field. 

 

SysAdmin Career

 

The typical career path for IT professionals is either non-existent or very rigid.  Based on Netsysco's research, most SysAdmins do not a clearly defined career path.  In fact, in many shops with more than one SysAdmin, there is no distinction between the work they do, regardless of their skill level or strengths.

 

In a rigid career environment, the responsibilities of the SysAdmin progresses by seniority in a mainframe-like structure grid:

 

 Junior                         SysAdmin             Senior SysAdmin                       Management

 

For example, a college graduate is hired into a Junior SysAdmin position.  She goes through on- and off-the-job training and learns by shadowing more senior personnel.  Soon she is able to perform routine tasks such as editing files, adding and removing users, and using shells.  She is being promoted to SysAdmin with more advanced responsibilities such as installing third-party software, NFS and NIS configuration, and shell scripting.  A couple of years later she has the chance to move into a Senior SysAdmin role with performance tuning responsibilities, client/server and C programming, network administration, and automation project work.  From that point in her career, the only way "up" for her is a technically hands-off role in infrastructure management (for example Operations Manager, Manager of Technical Services, or Network Manager) with administrative responsibilities such as budget planning, hiring and retaining, performance evaluation, training, etc.

 

Many companies are facing the challenge that strong technical people are "lost" into a management role beyond a certain level.  Similarly, IT professionals with career ambitions are not able to gain more responsibilities, respect, and monetary rewards for their contributions in a technical role.  Compensation adjustments such as broadbanding (widening the salary range for particular job functions) are insufficient instruments because they only address the monetary question but not the increasing job responsibilities and changing reporting structures.[1]

 

Regarding traditional job responsibilities, this paper discusses the responsibilities of SysAdmins as an example for all IT jobs.  Responsibilities of a SysAdmin vary based on size of the company and shop, technical environment, industry, and daily work requirements.  However, The System Administrator Guild (SAGE) has formed the "sage-jobs" working group to create a set of appropriate job descriptions for SysAdmins and to promote their adoption by organizations that employ SysAdmins.[2]

 

Following are the "soft" skills or non-technical skills SAGE defines as crucial for a successful SysAdmin:  SAGE breaks SysAdmin job levels and respective soft skills down into:  Novice SysAdmin, Junior SysAdmin, Advanced SysAdmin, and Senior SysAdmin.  According to SAGE, Novice and Junior SysAdmin should have strong inter-personal and communication skills, should be able to follow instructions well, and should be good on the phone.  The Advanced SysAdmin should have the same skills as well as training and instructional skills and good documentation and writing skills.  Additionally, the Advanced SysAdmin should be able to train users in complex topics, to make presentations to an internal audience, and to interact with upper management.  Finally, Senior SysAdmin should have all the above and should be able to write and present proposals to customers, management, and external audiences, and to act as vendor liaison.

 

It is important to notice that SAGE defines the soft skills of SysAdmins in a universal way.  In other words, anyone who wants to become a Senior SysAdmin has to have the above mentioned non-technical skills.  SAGE does neither address the issues of the individual SysAdmin's talents and passions nor the reality that many fine technical people do not have excellent interpersonal skills. 

  

 

Changing Requirements for IT

 

The role of IT and other "support" departments such as Human Resources and Customer Service is at a crossroad.  Companies are looking to focus their technical, personnel, and financial resources into areas of the firm where profit is generated.  The firm's core competencies are supported and nurtured.  Top management constantly evaluates the strategic importance of certain functions, and non-critical or administrative tasks are prime candidates to be outsourced.  The trend to outsource the whole or part of the IT department has picked up momentum in recent years and is expected to move at an even faster pace in the years to come.   As an alternative for being outsourced, IT has the opportunity to prove that it can be a strategic partner for top management.  Information and information technology can be a source for a company to move to the next level if it is utilized to its full potential.  The involvement of IT in an early stage of planning and strategizing can make a difference between a striving company and an ailing one.  IT's role is to put itself in the spotlight of top management and to promote itself as business partner.  It has to prove that it can help the firm become more competitive and better satisfy the company’s customers.

 

As if this is not difficult enough, the lack of qualified IT professionals and the changing attitude of employees towards employment adds to the complexity of the task.  The competitive job market for IT professionals makes it difficult to hire the right people.  Retention of strong performers is more challenging than before, because many employees are not interested in life-long employment with one company.  Rather, they are constantly working to build their career (and their resume…) through the development of more technical and "soft" skills.  Training potential and variable career paths are two strong arguments for IT professionals to stay with one employer.

 

The art is to combine the need to become a strategic business partner and to attract and retain strong human resources at the same time.  The next section introduces an organizational model catering to this challenge.

 

 

Survey Results

 

Netsysco conducted two surveys in 1999 to learn more about the changing job functions in IT.  The goal of the surveys was to determine how the talents and passions of IT professionals are being utilized and how their job responsibilities have changed in recent years.

 

SysAdmins Survey

 

We talked to HP-UX System Administrators regarding their job responsibilities and career progressions.

 

Regarding their job title, we heard 20 different answers, ranging from System Analyst to Capacity Planning Manager. This is surprising, considering that all these people primarily do system administration, including OS maintenance, user support, system configuration, performance, security, and some networking.

 

Regarding their experience in system administration, 13% of the interviewees had less than 3 years, 19% between 3 and 5 years, 45% between 5 and 10 years, and 23% more than 10 years experience.  In other words, most people we talked to have more than five years of experience and were able to provide Netsysco with sufficient information about the changes in job responsibilities for their profession.  When asked about the size of their company's SysAdmin group, the answers were: 39% three or less, 29% between 4 and 10, 19% between 11 and 30, and 13% above 30.  The majority of people we interviewed work in small to medium size HP shops (under 10 SysAdmins), so they are the ones with the broadest job responsibilities and the lowest level of specialization.

 

We also asked if their job responsibilities have changed in the last three years, and the overwhelming answer was yes (84%):

 

 

Next, we asked the SysAdmins for the specific areas where they have faced the changes.

 

 

As the results show, by far the most significant changes have been in two areas:  technically, the greater exposure to network administrative tasks including Internet responsibilities;  and non-technically, the increasing responsibilities in management tasks (planning, supervision, administrative duties, development of strategies).  Other non-technical changes are the increased role in training and mentoring, and the increased role of team related activities (meetings etc.).  Also, more tools (HP Openview, etc.) are being used, application support picks up in pace, and database administration is becoming part of SysAdmin's job.

 

To the question if their formal job description has been adjusted to the above mentioned changes, the answers were: 

 

Yes:	19%
No:	52%
Don't know:	10%
N/A	19%

 

Clearly, the changes in job description are lacking behind the changes in job responsibilities.  What is also interesting is 10% of the participants did not know if their job description had been changed or not.

 

Also, we wanted to know if reporting structures have been changed in accordance to changes in job responsibility.  The answers were:

 

Yes:	19%
No:	61%
N/A:	20%

 

In 61% of cases the reporting structure was not adjusted to the changes in job responsibilities. This raises the question why companies do not see the need for internal restructuring even after their SysAdmins face significant changes in job responsibilities. 

 

Next, we wanted to know what the typical career path for a SysAdmin is. 

 

The most mentioned answer was "no typical career path" (42%).  There are multiple reasons why this answer was given, including "no formal career path in place", "very high turnover, no one stays longer than 2 years" to "the company has a very flexible career development program adjusted to the individual contributor".  Another 42% of the SysAdmins said that they have some sort of technical career path in place, from two to four steps between entry level and Senior SysAdmin or Manager.  Only 6% mentioned that the company has a dual career path in place, a managerial and an equally established technical career path.  This approach allows IT professionals to either grow into a managerial role or a senior technical role without people or budget management tasks.  Again, interesting to notice that 10% of SysAdmins were not aware of the existence of a career path in their company.

 

In our last question we wanted to know if the SysAdmins felt that their personal strengths were utilized to their full extension in their current job.  The majority of people (58%) did indeed feel that this was the case, while an astonishing 42% denied it.  We asked the SysAdmins in what areas do they have strengths, which are not fully utilized:

 

 

The three most mentioned answers were project skills, planning skills, and leadership skills.  Interesting is that all three skills are becoming more and more important in the requirements for strong SysAdmins, especially for senior people (as mentioned earlier in the SAGE skill summary). 

 

Manager of Technical Services Survey

 

To round out the picture of changes in the job responsibilities of SysAdmins, we talked with their managers.  We interviewed Managers of Technical Services who are managing SysAdmins.  13% of the interviewees are working in IT departments with 1 to 10 people, 47% in departments with 10 to 30 IT professionals, and 40% in larger departments (over 30).  In other words, most people we interviewed are working in medium-sized shops.  27% manage under three SysAdmins, 36% between 3 and 5, and 27% more than five SysAdmins.  These numbers reflect a healthy mix of technically hands-on managers and managers of larger groups of SysAdmins.  We also got a mix of experience levels, whereby 40% of managers have been in their current role less than three years, 27% between 3 and 5 years, 20% between 5 and 10 years, and 13% more than 10 years.

 

We asked the managers if the role of their SysAdmins has changed in the last three years.  80% of the responses were yes, a strong confirmation of the SysAdmin survey results.

 

 

 

 

When asked what specifically has changed, increased network administration responsibilities was mentioned most frequently (26%).  An interesting finding is that an increase in managerial tasks (planning, strategic work, etc.)  was only mentioned by 7% of the managers, a clear discrepancy to the 19% of SysAdmins who feel this is a part of their job.

 

 

 

Consequently, we wanted to know if the managers have adjusted the job description of their employees to the above mentioned changes.  27% of managers responded with yes, 60% with no, and 13% did not have a formal job description. In comparison to the SysAdmin survey, slightly more managers claimed that they have adjusted the job descriptions.  In respect to the reporting structure, only one manager claimed a change, all the others said that the reporting has not been changed or adjusted.  67% of managers are managing the same job functions for the past three years, 33% have faced changes.

 

Next, we asked for typical career paths of SysAdmins.

 

 

 

 

40% of managers said that there was no typical career path in their group.  The reasons cited were: IT department too small, employee turnover too high, and company growing too fast.  60% of companies had a formal career path in place, from two to four steps.  None of the interviewed companies had a dual career path.

 

Finally, we wanted to know if the managers had the feeling that the personal strengths of their employees are fully utilized in their current job.  The majority of managers had the opinion that this is exactly the case, while 33% said that there is some lack of utilization (particularly project skills).  There is an interesting discrepancy to the answers given by the SysAdmins, where 42% of participants said that they are not fully utilized.

 

 

New Trends in Organizational Theory, Passion Based Department

 

A lot of research has been conducted on organizational theory and the optimization of departmental structure in recent years.  Due to the accelerating speed of change in the business environment and technology, flexibility dominates the discussion about the “ideal” form of departmental organizations.  One model, described in HR Magazine[3], emphasizes the evolving role of Human Resources departments from a supportive to a strategic function.  This model can apply to companies that recognize the potential power of the IT function to become a strategic business partner.  This paper applies the above-mentioned model to an IT department to create a Passion-based IT Department.

 

The model describes the responsibilities and objectives of an IT department as threefold, with three groups working parallel to each other but with different focuses.

 

 

 

Each of the three groups consists of a combination of professionals from junior to senior staff.  Technical skills have to be sound and equally up-to-date in each group. For instance, basic system administration skills should be required for members of all three groups.  The technical skills' portfolio in each group varies in accordance to the size and type of business and technical infrastructure.  Clearly, the three groups are not separated by technology.  For instance, in one company, all three groups - ISC, COE, and SBP - might consist of Application Specialists, SysAdmins, Database Specialists, and a manager.  In another company, two groups might consist of SysAdmins and Database Administrators but no Application Specialist. The third group might consist of DBAs and Application Specialists.  Two groups might not even have a manager but a number of Project Leaders reporting directly to the IT Director.

 

Let us have a closer look at the breakdown of the IT functions in this model:  

 

1.  Infrastructure Service Center

The first and primary responsibility of IT is to deliver a sound technical infrastructure and to build competence and credibility through excellent service.  This objective is achieved with the people working in the Infrastructure Service Center.  The Infrastructure Service Center (ISC) guarantees reliability of the data center and excellent customer service.  ISC strives for efficiency. The customers for this group are the users of the system and their managers.  The infrastructure is designed in a manner that accommodates the users' needs but at the same time accommodates the latest technology in a cost-efficient manner.  Also, the infrastructure is standardized as much as possible.  Another job for ISC is to explain the IT infrastructure to business and to market its services to the business.

 

The best employees for ISC are people with

·                    strong understanding of infrastructure technology (Network and HP systems administration)

·                    outstanding customer service attitude

·                    passion for helping customers

·                    strong oral and written communication skills

·                    great troubleshooter and technical support skills and aptitude

·                    an open and flexible mind

 

The ISC function must not be considered a minor technical function for junior professionals, but rather the backbone of the whole organization.  Pay ranges and promotion policies need to be designed in accordance to the importance of the function.  Career paths are either mobility within the ISC group if it is diverse enough or across to one of the other two groups.

 

2.  Center of Excellence

The second group are IT specialists with expertise in the design of systems and providers of systems consulting.  The focus of the Center of Excellence (COE) is to provide effectiveness for the organization, or the creation of value.  Superior technical support and on-time project delivery are two examples of COE.  This group concentrates on design rather than transactions. Customers for COE are the line managers.  Together with their customers, COE develops service-level agreements between IT and its business-unit clientele at a mutually agreeable level of cost versus service.

 

Members of COE are specialists with strong backgrounds in business application, systems, and network as well as (former) managers. 

 

The best employees for COE are people with:

·                    strong business and industry understanding

·                    passion for excellence in project management

·                    technically up to par

·                    good presentation skills

·                    able to communicate technical issues with line managers

·                    preferably work experience in both, IT and business departments

 

For a technical person with interests in business issues or a business professional with strong technical aptitude and interest in IT, COE is the right group.  The career path of an individual could be within COE, or could lead to opportunities in the ISC or SBP group.  With a strong background in business, the career could also lead out of IT into other business departments such as Finance or Marketing.  For example, Caterpillar Inc. introduced multiple career paths for IT professionals a couple of years ago and it is not unusual for people there to cross IT, Finance, and Marketing throughout their careers[4].

 

 

 

3.  Strategic Business Partner

The Strategic Business Partner (SBP) group takes over the role held traditionally by senior IT managers.  SBP's responsibilities are IT consulting and IT planning.  Furthermore, the goal of SBP is to link the business with appropriate IT programs and solutions.  Consequently, employees in this group might even report directly to line managers with a dotted line to the IT Director.  The overall objective for SBP is to create value for the whole organization. 

 

The best employees for SBP are people with:

·                    passion for using technology to enable business change

·                    strong vision

·                    ability to link technology to business objectives

·                    understanding user needs

·                    appetite for constant innovation and learning

·                    passion to identify and communicate new ideas for making money with technology

·                    excellent communication and presentation skills

·                    business understanding on decision maker level

 

Because the passion for value translates into business payoffs, SBP earns credibility with their business peers and is viewed as a partner rather than supplier.  The SBP focus is not so much efficiency-oriented measurement, but more intangible benchmarks.  Value is measured by narrative or story rather than hard numbers, because that is how innovative ideas are born[5].   

 

How would this model work?  Let us look at the life cycle of a new application project.  The SBP group identifies and evaluates the new software and works together with top management to get their support and commitment.  SBP also develops an exit strategy in the case of project failure.  COE subgroups would take over the project and - together with their business customers - work on the actual implementation of the new system.  After the new application goes live, ISC takes over the responsibility of maintaining and supporting the system.  COE or ISC should be responsible for training users.  COE and SBP have to work together if it comes to the point of "killing" the project.

 

It is important to notice that the only constant in this model is change.  The organizational structure has to be reviewed frequently.  IT should ask itself: Are workloads equal?  Are employees cross-trained?  Are current processes working?  Are we meeting our business needs and the needs of our clients? 

 

Consequently, the question of in- or outsourcing comes up.  This paper does not address the topic of outsourcing, but generally speaking, outsourcing has to be seen as a strategic business decision.  IT has to ask itself: What are we providing that is of most value to the organization?  Is it customer support, systems development, or network management?  What administrative tasks are hindering us to really have an impact on our organization?

 

 

Application and Suggestions

 

Organization Structure

 

In the Passion-based IT Department, SysAdmins are able to contribute to the IT department's success not only with their technical expertise, but also in a manner that utilizes their personal strength to a greater extent.  If 42% of participants in Netsysco's survey think they have strengths they can not use currently, then there is a lot of potential in IT departments for growth.  For example, SysAdmins with strong project work skills should move into a role in the Center of Excellence group, where they would work with business units improving the effectiveness of the whole organization.  SysAdmins with planning and leadership skills would find an excellent role in the Strategic Business Partner group, helping the organization to move forward by partnering with top management to get the most out of new technical developments.  SysAdmins with documentation and problem solving skills would find satisfaction in the Infrastructure Service Center, supporting internal customers and improving the information flow through the firm. 

 

Career Paths

 

Instead of the typical career path for SysAdmins, the Passion-based IT Department offers a variety of career progressions for IT professionals.  Not only can an individual grow in his group, but can also move to another group if his personal strengths and preferences change over time.  For example:

 

A SysAdmin with a Bachelor Degree in Marketing would start out in a company in the Center of Excellence group, working closely with the Marketing and Sales departments to develop a new customer service database.  Two years later, his passion for customer service attracts him to move into a more senior role in the Infrastructure Service Center group to support the internal customers.  Three years later, the IT Director offers him the position as Manager of Technical Support in the ISC group.  However, our SysAdmin does not feel he is ready yet for supervision but rather applies for an opening in the Strategic Business Partner group, where he hopes to learn more strategic thinking and dealing with top management.

 

Hence, the Passion-based IT department allows the growth of IT professionals in a variety of areas.  Management is not necessarily the ultimate destination for a technical person, but one of several options. 

 

Caterpillar Inc. has developed two alternative career paths for its IT staff.  Besides the traditional supervisory or management path, Caterpillar also provides a technical career path and a business application path.  The technical path lets people become experts in, for example, HP-UX or databases and earn more income according to what they deliver to the business.  The business application path lets people focus on a specific business application, such as material resources planning, and lets them make strategic contributions in that area.  The driver for Caterpillar for this new concept was to reward people for their contribution, not pay for knowledge or seniority.  Caterpillar's career progression is not irreversible, so somebody who moves from a managerial to a technical career path is able to go back at any time.  Jim Miller, Manager of Administrative Services at Caterpillar's Corporate Information Services, points out some general trends in career planning: more emphasize on "soft" skills such as communication skills;  more attention to how a job is done, not just if a job is done (utilization of human, technical, and financial resources);  and a greater mix of technical skills[6].      

 

In conclusion, the described Passion-based organizational model should give the reader an idea about potential areas to grow the IT department.  It is not a perfect world, and 100% technical and soft skills utilization of IT professionals will be difficult to achieve.  But there is hidden growth potential for all but a few IT departments which can be tapped by modifying the organizational structure, and at the same time allowing IT to become a strategic business partner in the company.