Elasticity has become a much-sought-after trait for IT organizations. With technology priorities driven more than ever by business demands, a CIO must be able to direct resources -- including employees -- wherever they are needed. This has to happen quickly and smoothly, with staff feather-ruffling kept to a minimum.
The elastic IT organization combines the ideas behind just-in-time inventory planning and portfolio management. CIOs attempt to have just the right quantity of human IT resources, deployed precisely when and where they're needed most. And they treat IT projects not as discrete efforts, but rather as components of an overall service-delivery organization.
According to pioneering IT managers and other experts, it's these factors that differentiate genuine elasticity from the age-old tactic of rounding up contractors or inking an agreement with a systems integrator.
The good news is that CIOs today have a wealth of staffing options: full-time employees, part-timers, contractors and outsourcers -- both on- and offshore. The trick is to leverage these elements to create a sort of human on-demand IT organization that satisfies business and budget requirements while providing career growth for workers. It's a challenge, but one that smart IT leaders are meeting.
The business realities that have created this need for elasticity are familiar to IT managers. The tight budgets that have prevailed for several years pared down IT staffs and increased the demand for less-expensive alternatives such as contract help and offshoring. Meanwhile, day-to-day business operations and IT have grown so tightly intertwined that they must be treated as one and the same.
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"What I'm hearing from hiring managers is, 'We want options,' " says Katherine Spencer Lee, an executive director at Robert Half Technology. She says that CIOs and IT managers who come to the staffing firm, a division of Menlo Park, Calif.-based Robert Half International Inc., seek to maintain a bedrock staff of full-timers, contractors who can "flex strategically" from project to project and an offshore outsourcing company for a small number of commodity projects.
There are many ways to meet the need for flexibility in staffing. Harrah's Entertainment Inc., for example, created a sort of IT SWAT team that rotates quickly from project to project, depending on what the Las Vegas-based gambling and entertainment company needs to accomplish.
In a 2002 reorganization, Harrah's divided its IT organization into groups devoted to application development, operations and support. A fourth group -- the "solutions management group" -- serves as a liaison between IT and business. This setup made IT more nimble and responsive to user and line-of-business needs, says Heath Daughtrey, Harrah's vice president of IT services. However, he adds, "we realized a key component was missing: flexibility. We needed the ability to scale [various IT groups] depending on business and markets."
In response, Harrah's pulled 30 full-time programmer/analysts from the four groups and created a flexible pool devoted to what the company calls "rapid-cycle rotation" -- intensive, high-priority projects that last no more than six months. According to Daughtrey, the team has been successful as a "rapid resource delivery model," allowing Harrah's other four IT groups "to operate as lean as they can."
The program hasn't been without speed bumps, though. "We've seen over time that there are individuals who don't necessarily thrive in a fluid environment," Daughtrey says. Partly as a result, the original team of 30 has been pared to about half that number.
Bruce Goodman, CIO and chief services officer at Humana Inc., is a noted proponent of elasticity in IT. Humana's efforts to make its technology staff more flexible were born of near desperation, Goodman jokes. "A few years back, we overhauled IT so we could better support the business," he says, "and once we got [business] people all excited about technology, it occurred to us that it'd be nice to be able to deliver what we'd promised."
Before the IT makeover, the Louisville, Ky.-based health benefits company spent 30% of its resources, including workers' time, on application development and 70% on maintenance. That ratio has since been reversed and then some: Goodman says 80% of resources now go to development and only 20% to maintenance.
Humana's rallying cry became "Partner before buy; buy before build," he says, and this motto applied not only to applications but also to human resources. For starters, the company began moving mainframe legacy operations and maintenance to an outsourcing firm in India.
To create a particularly strategic application -- which it hopes to not only use in-house but also sell to other health care companies -- Humana turned to Electronic Data Systems Corp., because that firm had consultants whose specialized skills were key but won't be needed once the development is complete.
Robert Half's Lee says this approach makes sense. "When a company needs specific expertise that they lack on staff, they'll bring in contractors for six to 18 months just to get that project done," she says. "We see that a lot with things like SAP upgrades that are challenging and demand hard-to-find skills but aren't 'forever' projects. Contractors give you that elasticity."
What's New?
But outsourcing to India and working with EDS aren't exactly revolutionary practices. What is it that separates a truly flexible or "elastic" IT group from those that just outsource or hire systems integrators?
Goodman says the difference is that elasticity demands a sweeping, big-picture approach to the entire range of IT tasks, projects and services. Elasticity assumes that "you look across the board," he says. "You're managing a portfolio of projects and finding the correct cost-effective approach to each one, all within typical [budgetary and service delivery] constraints." Goodman is describing IT portfolio management -- a practice lifted from the financial investment arena -- which involves managing the suite of corporate IT projects as if it were a financial portfolio, balancing riskier projects with safer ones and monitoring the portfolio to ensure an acceptable risk/reward ratio.
It's clear that while its components, such as offshoring or hiring temps or contractors, tend to be tactical and reactive, true elasticity is strategic and anticipatory.
The People Part
If strategic thinking is one pillar of IT elasticity, the other is true commitment to the backbone of the organization: full-time employees. "If I were a CIO wanting more elasticity, I'd look carefully at employee development programs," says Rick Poppell, an analyst at People3 Inc., a Gartner Inc. research firm in Bridgewater, N.J. He says the best elastic IT groups are broadening staffers' skills to move them from back-end processes, such as coding and maintenance, to front-end roles, which include project management and business analysis -- high-visibility, high-value jobs that reflect the symbiotic relationship between technology and business.
That has been the model at Harrah's, where solutions management group participants develop a broader-than-usual range of skills, according to Daughtrey. "Rather than predominantly supporting one [proprietary application] such as casino management, they work on a variety of projects: e-business, lodging, casino, etc.," he says.
Humana also keeps a close eye on IT staffers' career paths. "Despite our partnerships and outsourcing, we make it clear we have plenty of career opportunities [for full-timers]," Goodman says. He believes the key to retention is to offer employees challenging, high-value-add development assignments in hot areas such as data mining, wireless and Humana's intranet.
Tim Ramsay agrees. An associate vice president at the University of Miami in Coral Gables, Fla., he advocates elastic IT staffing, which he says is relatively easy in a university environment, where undergrads eagerly tackle thankless jobs. "The core IT staff is happy to let students do some of the tedious stuff, leaving them more challenging work," he says.
In the end, Poppell says, truly elastic IT organizations are easy to distinguish from those that are merely plugging holes. "The companies that are doing better understand the business drivers behind IT," he says. They have a formal IT plan supported by an infrastructure plan that looks ahead three years. This, he says, allows businesses to create a "formal IT workforce plan that asks, 'Do we have the capability to complete our various projects?' "
If your IT group lacks such strategic planning, you're probably not yet really elastic. That means you're most likely paying a premium for skills you could have developed in-house, and the only things stretching are your budget and your employees' patience.
Ulfelder is a Computerworld contributing writer in Southboro, Mass. Contact him at sulfelder@charter.net.