Tuesday, January 26, 2010

Are IT departments rational?

The company which owns mine recently recruited another member of IT staff, making the department five strong. They’re all male and they dwell in the darkest recess of their building – the IT dungeon – from whence they exert dark and terrible influence over the rest of the business. The directors are frightened of them. At board meetings I have occasionally made comments about “the tail wagging the dog”, which have invariably been greeted much as the Yard’s remarks about science and morals were on Dinner with Portillo.

As I see it, an ideal IT department would:

1) introduce systems to serve the needs of the business, which are sufficiently effective to have a net benefit on profitability when the cost of the system (including the IT staff) is taken into account
2) train staff and maintain, secure and troubleshoot on those systems

Whereas in reality what happens is:

1) the business decides it wants to do something, consults the IT department and then, having heard their lengthy and baffling objections, compromises on what it wants to do for the convenience of the IT department
2) the IT department regularly ‘upgrades’ systems for esoteric IT reasons, as opposed to obvious business reasons, requiring users to retrain and creating endless new troubleshooting opportunities

The frequency of (2) not only justifies the existence of the current IT department, it requires it to regularly expand. Each of its members is, I imagine, on a pretty hefty salary – significantly heftier for example than a ‘low-skilled’ admin worker of the kind that used to populate businesses that relied on less ‘efficient’ manual or paper-based systems.

I appreciate there’s another element here, which is that as suppliers, customers etc upgrade their systems, so the pressure is on everyone else in the chain. But what drives this? Is it business efficiency, or marketing by IT suppliers, or IT departments themselves?

So the question is: does anyone have a view – or indeed is there any research out there – on whether the inexorable rise of IT has actually benefited the average business, or would we have been better off, from a cost/benefit point of view, had we stopped when we invented the fax machine and the photocopier?

15 comments:

worm said...

as well as the other stuff I do, I'm also my company's IT department. Maybe I should start messing with my workmate's heads a bit more

Brit said...

Exploit the mystery for all it's worth, would be my advice.

Sean said...

IT people are a bit like Bankers they hold companies to ransom.

Dont pay the banker his wonga and he is taking his clients with him.
Dont do as the IT people say and the world crashes around your ears...cant live with em, cant live without them.

David said...

The research on IT payoff seems to be deeply ambiguous. Some studies say that it pays off and some studies say that it doesn't.

Everybody seems to agree that it is contextual. It depends on the industry, the competitive environment, how fast things are changing and on the firm's overall strategy.

I think that it's fair to say that there are certain limits below which lack of IT will hurt you, but it is very questionable whether more IT investment than your competitors pays off -- unless, that is, you find a way to do something using IT that your competitors can't match. Unfortunately, those tend to be bet the company decisions; you either find some way to do something that your competitors won't be able to copy for years -- by which time you've moved on to something else -- or the attempt puts you out of business.

That means, generally, that only small, young firms make the attempt, and small, young firms are so variable anyway that the signal to noise ratio makes analysis difficult.

malty said...

Depends what is meant by IT, the definition is as precise as the word beige, just like the trade it works within, the confuser industry.
Put quite simply it should be the analysis of the organizations existing operations that can best be improved by the application of computing, followed by a thorough appraisal of what is available giving the best, cost effective solution, undertaken by people who have a thorough knowledge of the application of the appropriate computer systems. Initially this obviously should be carried out by third parties.
If the installed system requires operatives to keep it in as efficient an order as possible then so be it.

The devil lurks in the detail.
System 1 is the all embracing, vast, multi-user, monkey see, monkey do type, requiring low operator skills, this would apply to virtually all office based systems.
System 2 is the highly complex front end, design to production system requiring an exceptionally high level of skill, Maya would be a typical example, without it cars would be significantly more expensive and new model lead times a shambles.
Many of it's operators earn as much as British doctors.
System one types, why would these require in-house IT? a maintenance - upgrade contract with the supplier would be more effective.
System two, the in house IT tends to be more of a skill supervisory role with ongoing training, very necessary.

I know someone who is 'an IT manager' with the local council, in a conversation I brought up the subject of Unix and C, didn't know what the were, turned out the job involved running round the offices ensuring everyone was 'up to speed with Word'

I know someone else also an IT manger who was responsible for the successful sourcing and installation of a type 2 system and its integration in his companies factories in the UK, Canada and Germany.


IT? hmmm.

Makes a good bedfellow for Human Resources.

Susan said...

No.

PS As for dinner with Monsignor Portfolio, the i-player seems to be on the blink, but I will obey its command and try again later.

Hey Skipper said...

The company I work for could not even begin to exist without IT.

So I guess that means it must benefit at least one business I am sure you have all heard of.

ghostofelberry said...

i've worked for at least two companies where the IT dwarves, in their basement, said they couldn't afford to write a special program so the company would have to hire temps to do data entry. In both cases temps i worked with wrote the programs themselves then bunked off on endless cigarette and coffee breaks, surfing the net and being paid a fiver an hour as their programs did the data entering for them.

Susan's Husband said...

Are IT staffers paid well? My experience has been that they are almost uniformly poorly paid, leading to high turn over and many of the effects Brit notices. Or do I hang out with the wrong sort of IT staffer?

P.S. My company builds a product for IT staff, to make their job easier, and it's tough selling in to that market. Make of that what you will.

Brit said...

Thanks all. I realise it is contextual of course, just wondered if there's any studies about how many long-established SMEs are, as our parent company appears to be, caught in an IT trap.

David said...

At a guess, I'd say no, there aren't any such studies.

There is, though, a very good literature (mostly written by Eric Abrahamson at Columbia) on management fads and fashions that's probably very relevant to your idea of an IT trap. Basically, it says that, even if your private estimate of the value of a particular fad is negative, you'll adopt it if you see enough similarly situated people adopting it.

This is a version of a cascade effect, and it's amazing how fast a cascade can start. Basically, if you're third in line to act and the two actors ahead of you take a particular action, it's almost impossible for you not to follow -- even if you think it's the wrong decision -- unless you have some very strong private information.

Basically, it's related to IBM's old slogan, "No one ever got fired for buying IBM."

It's also related to the social-psych phenomenon that, sitting in a group, we interpret everyone else's silence as meaning they don't have questions. As a result, we don't ask our own questions so as not to appear dumb. Everyone then walks away with their questions unanswered. Here, we all might have doubts about buying new technology, but we interpret everyone else's action in buying the technology as meaning that they have no doubts. Then we defer to them and buy the technology.

At some point, we'll buy the technology even if we're certain that the money is wasted, and tell ourselves that it's a "signaling mechanism" or shows that we're a legitimate part of the industry.

David said...

I have no idea why I temporarily became incapable of writing a paragraph not containing the word "basically."

Luckily, I'm basically over that now.

wv: nanomahi: a very small portion of fish.

Brit said...

Thanks David. That's v true about the "Any questions?"

In fact, next time i'm giving a presentation, as I occasionally have to, I might well use that social-psych phenomenon as a preamble to "Any questions?"

Though on second thoughts it might prompt people to ask questions, thus preventing me from making a hasty getaway. Perhaps that's why nobody ever does use it as a preamble.

David said...

If my classes are at all typical, using it has no effect.

Brit said...

That in itself is interesting.