Formal Information Technology in a Small, Growing Company
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This document emphasizes the importance of establishing a formal IT department in small growing companies, outlining the benefits and foundational steps needed for effective implementation. It highlights the strategic role of IT in supporting various business processes, the necessity for thorough assessment and roadmap development, and the cautious approach to investment in technology. Additionally, it discusses the characteristics of successful IT leadership and key areas of IT activity, including infrastructure, application engineering, operations, security, and governance.
Formal Information Technology in a Small, Growing Company
- 1. Formal IT in a Small, Growing Company Fa Poorooshasb, MA, PhD Revised 7/13/2014
- 2. Agenda Opening Comments Rationale for Formal IT How to Start up A Note of Caution Characteristics of a Successful Department Head Extra Material: Drilldown on Specific Areas of IT Activity
- 3. Opening Comments The intended audience for this presentation is a business leader in a small but growing company, ie CEO, COO, CFO, etc The purpose of the presentation is to explain the benefits of a formal, strategic IT department and how these benefits are achieved
- 4. Rationale for Formal IT Wikipedia: “IT is the application of computers and telecommunications equipment to store, retrieve, transmit and manipulate data, often in the context of a business or other enterprise” In plain language, this means that IT facilitates practically all sections of the business Group Examples of IT Finance Daily accounting, period close, procurement Marketing Doc collaboration, campaigns, market analysis, lead generation Sales Quoting, opportunity management, forecasting, customer analysis Support Entitlement, case management, self-service Manufacturing Manufacturing control, supply chain and demand management HR On/offboarding, annual reviews All Personal devices (computers and phones), network connectivity, shared storage
- 5. Rationale for Formal IT (cont) Typically, companies first establish IT with part-timers (e.g. contractors or R&D engineers) and/or buy SaaS applications (eg Salesforce.com). Very small companies can operate efficiently with this adhoc IT As companies grow, the desirability of strategic IT grows. The drivers for a company to assume a formal IT function include Increase in the number of business processes Shared data requirements between different business processes Increase in the business intelligence required to run the company The often hidden or uncontrolled cost of the existing IT establishment Regulatory compliance Security IT spend is commonly 3%-5% of operating expense (this number varies widely by industry and company size). The amount of money spent (and potentially saved) on IT justifies the creation of a fully fledged IT department at some point between 100 to 1000 people Once a decision is made to implement a formal IT function, IT must start acting in a strategic manner
- 6. How to Start Up Understand what is needed from IT Interview top and mid-level leadership to determine company requirements. These needs should be couched in business terms, and specific technologic requirements should be avoided (IT should determine the technical solution). Some needs may not be articulated by the business, but are suggested by IT based on experience elsewhere Need Type: Need: Not: Fix existing problem Accelerate transfer of image files between sites by 10x Need to make inter-site network faster Fix existing problem Reduce seasonal spend in support organization Reduce the number of licenses for the CRM system New Process: Roll out new manufacturing process Implement supply chain management system New Process: Create scalable annual review process Implement SaaS HR review system New Process: Allow customers to self-support themselves Implement Knowledge Management product New Process: Support transition to public ownership Implement ERP system Company Culture: Increase staff satisfaction through company’s perception of IT as “cool” Deploy iPads to everyone
- 7. How to Start Up (cont) Understand what exists Audit existing IT personnel capabilities Conduct 360˚ review of IT personnel, including consultants Include personnel who do not work in IT, but who fulfill an IT function Identify existing IT processes, whether in IT department or outside Identify existing IT landscape Include core IT systems Look for and identify Shadow IT (technologies that are not paid for nor supported by IT) Develop draft roadmap for IT, along with ballpark budget Define gaps between what exists and what is needed Assign cost and ROI to activities and technologies required to fill gaps. Cost must be total cost (Initial implementation, post-implementation support and personnel costs) Return should include revenue generation, cost reduction, and penalty avoidance Return should also be calculated based on likelihood of being realized Roadmap includes potential IT staffing changes/transfers
- 8. How to Start Up (cont) Develop draft roadmap for IT, along with ballpark budget (cont) Set schedule for roadmap. Schedule will depend on Technical and procedural dependencies ROI, absolute cost and ease of changes Likelihood of business projections becoming reality In the meantime, execute on low-hanging fruit Review roadmap with executive leadership Adjust based on new understandings of priorities and budget realities Start execution Review execution on regular basis Measure IT achievement against expected schedule Measure business achievement against pre-defined KPIs Adjust roadmap as business environment/technological landscape changes Communicate progress against plan
- 9. A Note of Caution Delaying an IT investment can be a good idea. A newly established IT department should not jump to implement technologies simply because it can… Investment too soon can be damaging because Funds are diverted to IT that could be used to promote the core business Companies can get locked into business processes that are unsuitable Companies can waste money on technologies that will soon become obsolete or will never be implemented Delay can be good if A business driver for an investment has only a moderate chance of becoming real A temporary technology or process with a reasonable upgrade path can be implemented instead of an expensive technology The technologies on the market are rapidly changing, and a delay will indicate the likely market winner
- 10. Characteristics of a Successful Department Head Communicates constantly with company leadership, ensuring that IT goals are in support of business goals Capable of operating both at a very detailed and also at a strategic level Hires and mentors a top-notch team Keeps an eye on the mid- and long-term goals and ensures current activities contribute towards these goals Keeps an eye on technology changes and actively works to bring new technologies forward for review Is not afraid of changing path as business or IT conditions change Treats the company’s money as his or her own Drives the same characteristics down into the team
- 11. Extra Material Drilldown on Specific Areas of IT Activity
- 12. Main Areas of IT Activity Infrastructure Engineering Application Engineering Operations Security Governance Shadow IT Management
- 13. Infrastructure Engineering Infrastructure Engineering includes the design and implementation of fault tolerant, secure systems that typically are common across various companies Computers Storage Networks Telephony Personal productivity software (e.g. MS Office, email) Variations in how the above systems are implemented are dependent on Balance between cost and reliability Current and (likely) future shape of company Emerging technologies Local technology and vendor availability Some parts of traditional infrastructure can be moved to the cloud (eg, storage, servers) but other parts are still necessary on site (eg networks)
- 14. Application Engineering Application Engineering includes architecture, design, implementation & upgrading of applications that are specific to the company. These are frequently off-the-shelf applications that are customized. Examples include: ERP systems (e.g. SAP, JDEdwards, NetSuite) CRM systems (e.g. Siebel, Salesforce.com) Supply chain planning (e.g. i2, SAP) Collaboration/Record Retention (e.g. Sharepoint, Opentext, Box) Manufacturing Systems (eg Camstar, MetricStream) Middleware (eg WebMethods, Dell Boomi, Fusion) Customization of these systems are completely dependent upon definition of business processes. Frequently, a company changes (or does initial definition of) its processes to match the best-of-breed applications that it implements. Increasingly, applications are cloud based and are secured as a service rather than as an on-premise application. The evolution of such integrated SaaS systems is allowing ever larger companies to exist with no on-premise applications Systems that are a part of a company’s competitive competency are typically (but not always) engineered by R&D, not IT
- 15. Operations Operations includes day-to-day activities that ensure the business is served well by IT, but excluding activities that significantly change IT systems Service requests Application access requests New equipment requests Minor application enhancements Onboarding/offboarding Scheduled Maintenance Database maintenance Application tuning Security updates Backups Incident Management Restoration of services to normal after incidents Communication of reduction-of-service and restoration ETA Problem management Elimination of root causes that produce incidents Operations covers both infrastructure and applications, and is typically covered by a service level objective
- 16. Security Security ensures that access to company information is set at suitable levels for different audiences Sets policy on what types of information exist and who can access it Tests and audits active IT and other systems to ensure that policy is not being violated Participates in new system design to ensure that policy will not be violated Audits third party partners to determine risk to company assets through partners Trains company on IT Security best practices Monitors evolving security landscape to ensure policy and technologies remain at adequate security level IT Security frequently makes risk assessments in non-IT systems so management can decide on whether benefit of risky activity exceeds downside
- 17. Shadow IT Management Shadow IT Management is the activity of understanding what non-IT-supported systems (Shadow IT) are used by the business, and assisting the business in ensuring that these systems are effective and safe Traditionally, Shadow IT consisted of applications developed by R&D/other technical personnel, and located outside the data center. More recently, Shadow IT has shifted towards SaaS applications IT can bring value to existing Shadow IT in providing maintenance and ensuring supportability. This activity cannot happen until the extent of existing Shadow IT is understood. IT brings value to proposed Shadow IT in providing analysis of application/data security and interoperability, company sustainability, and system redundancy; based on this analysis, a new proposed Shadow IT system would be classified as “Not Recommended”, “Recommended as Stand Alone” or “Recommended with Integration”. Shadow IT has traditionally been frowned on by IT organizations. However, with the prevalence of effective SaaS applications, IT’s attitude must now be one of enabling the use of the right Shadow IT (and bringing it out of the shadows) versus the traditional attitude of “stop it at all costs”
- 18. Governance Governance includes the management of IT project activities that are not covered by Operations Project intake process Project management process (including phase gates, reporting and budget control) Project termination process Executive review of IT portfolio Governance is typically a symbol of a more mature IT organization
- 19. Other Significant Activities Budget Control Vendor Management Enterprise Architecture License Management The above activities are typically the responsibility of all IT managers, frequently with the assistance of a senior manager with particular responsibility for an area. As the company grows, the necessity of the senior manager becomes greater.
- 20. Thank you Author Contact Info: Fa Poorooshasb email: [email protected]