Lost IT Productivity

By George Florit, Managing Partner, Michael-Delia Inc.

Many IT organizations are victims of a substantial loss of productivity.  Unknowingly, significant numbers of IT people related resources are being lost from Core to Non-Core activities.

Core activities refer to those activities critical or central to the delivery of IT products and services to clients.

IT executives recognize that resources lost from Core activities is insidious — it proceeds gradually, in subtle ways and always with harmful effects.  As one executive put it, “It’s like being nibbled to death by ducks.  The little bites don’t hurt much but the cumulative results kill you.”  Management tools that can provide effective insights and controls are either unavailable or inadequate — “One can’t see the bites but one can certainly feel the cumulative effects.”

Executives agree, reclaiming lost productivity provides a substantial opportunity to optimize IT organizational performance and effectiveness.

Productivity Baseline

Commitments to the delivery of IT products and services are based on the use of specific levels of IT people related resources.  These commitments create a Productivity BaseLineBaseline for the IT organization — A baseline against which clients and IT staff measure the effectiveness of IT.

Unfortunately, what we find is the level of resources expected to be spent usually fall considerably short of the established Productivity Baseline.

The significant spread between expectations and the reality related to the delivery of IT products and services undermines the effectiveness and credibility of IT.

Core vs. Non-Core Study

A study addressing the actual Core and Non-Core profile of 112 Systems Development Units ranging in size from 126 to 1,123 FTEs was conducted.  Core activities referred to those activities critical or central to the delivery of the Systems Development organization’s products and services.

To provide a common reference point, an internet-based Performa-Analytics™ questionnaire was used for data collection.  The questionnaire contained activities (best practices) usually found in a Systems Development organization.

Questionnaire activities addressed major topics within Systems Development that are usually required to provide its products and service and the commensurate activities necessary for the interaction and support of other IT organizational units:  Planning, Research, Systems Development & Maintenance, Client Interaction & Support, Project Planning & Reporting, Staff Personal Administration, Quality Assurance, Operations, Telecommunications, Networking, Security, Desktop & Mobile Support, Accounting and Administration, Compliance, Merger & Acquisitions, Internal & External Audits, Competitive Assessments, etc.

The management of participating IT organizations reviewed and agreed to Core and Non-Core activities designations.

Study results were not intended to judge an organization’s Core and Non-Core profile.  The study’s purpose was to provide awareness of self in relationship to others.  Study results allowed participants to decide the appropriateness of their profile in light of their own unique circumstances.

Study Results

Chart Number 1

To facilitate review, the Core and Non-Core profiles of all participating Systems Development organizations were organized into five distinct groups.  Each group indicated a specific Core and Non-Core resource expenditure range and the number of Systems Development organizations within the range.

112 Study Participants Core and Non-Core Profiles 082318 01

Also indicated was the highest expenditure of resources to Core activities — 85 percent of all Systems Development resources.  The 85 percent of Core resource expenditure was utilized as a “benchmark” against which all participating organizations were measured.  Indicated was the percentage of additional resources that would have to be spent to achieve the 85 percent benchmark.  The significance of resource shortfalls was expressed in FTEs and annualized budget per 100 staff members.

Chart Number 2

Core and Non-Core Resource Expended by 112 Systems Development Organizations 09-04-18

Chart Number 2 indicates:

  • The highest Core resource expenditure was 85 percent and the lowest Non-Core was 15 percent.
  • The lowest Core resource expenditure was 59 percent and the highest Non-Core was 41 percent.
  • Of the 112 study participants, 101 or 90 percent had Core resource distribution profiles below 85 percent.
  • To achieve an 85 percent Core resource expenditure profile, resource deficiencies ranged from 1 percent to 26 percent.
  • Per 100 staff members, an annualized staffing shortfall for Core activities ranged from 1 to 26 FTEs.
  • Per 100 staff members, an annualized staff budget shortfall for Core activities ranged from $175K to $4.55M.

Chart Number 3

Resource Distribution for 112 Systems Development Organizations

Chart Number 3 indicates:

  • Forty-nine (49) Systems Development organizations or 44 percent of all study participants spent 31 to 41 percent of all resources on Non-Core activities.
  • Twenty-eight (28) Systems Development organizations or 25 percent of all participants spent 25 to 30 percent of all resources on Non-Core activities.
  • In total, 77 Systems Development organizations or 69 percent of all study participants spent significant amounts of resources on Non-Core activities.

An IT organization’s actual Core resource expenditures are influenced by circumstances unique to the organization and should be evaluated accordingly.  However, if resources spent on Core activities are lower than the organization’s Productivity Baseline, the credibility and reputation of the IT organization with clients could be in jeopardy and the IT work environment more stressful and difficult.

As a stand-alone area of inquiry, review of Core and Non-core resource expenditures were not often conducted.  When reviewed, results were most often surprising, disappointing and, in some cases, alarming.

Summary

Due to a lack of effective data collection practices and reporting tools, availability of Challenge, Change, Opportunitynecessary information and pressing work priorities, the study revealed that many participating Systems Development organizations were not fully aware of:

  • Their current Core and Non-Core resource expenditure profile.
  • The significantly high levels of resources being spent on Non-Core activities.

Awareness of the above encouraged participating IT organizations to begin improving their practices and periodically monitor their Core and Non-Core profiles.

Participating organizations also indicated they would initiate efforts to reconfirm their Productivity Baselines.

Without increasing the IT budget, reclaiming lost productivity could be substantial:

Opportunity Summary 01

As indicated, to achieve a Core resource distribution profile of 85 percent and Non-Core distribution of 15 percent:

  • Forty-nine (49) survey participants could potentially redirect 16 percent to 26 percent of all available resources.
  • Twenty-eight (28) survey participants could potentially redirect 10 percent to 15 percent of all available resources.
  • Nineteen (19) survey participants could potentially redirect 2 percent to 8 percent of all available resources.

In addition to reclaiming lost productivity, gains could also be realized from shifts in staff attitudes regarding the organization’s Core and Non-Core profile.


For additional information regarding Core/Non-Core resource allocation or other related IT organizational performance topics, please contact us.

Telephone:  775-384-9403   |    Email:  contact@michael-delia.com


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