“The Goodwind Company has embarked on quest to challenge poor labor productivity in IT organizations. 60% utilization rate is not good enough – and cost enormous amount of money and business credibility. It is time to stop talking – and start doing something about the situation! “
Imagine this situation. You are driving into a petrol station to fill up your car on petrol after a long day at work. But there is something wrong with the petrol pump and half of the petrol falls flat on the ground beside the car. Not good! The station manager comes out and says – “well, that is not my problem – you still have to pay for all the petrol you used.” You would probably be quite upset and not return to that particular petrol station. This is unacceptable! Or is it? Do we actually accept this kind of behavior elsewhere?
Research (source: Ln4 Solutions, 2014) shows that only 60% of the IT resources (FTE) are creating value of business – mainly due to weak resource planning. The rest of the hours are unutilized and/or not creating business value.
In order to get 1,000 hours of value creation, business have to pay for another 666 hours to get the work done. With an average fee of 100 €/hour – the loss is approximately 66,000€/1000 hours of work and we tend to accept that. A large IT organization uses approximately 1,000,000 hours for development and maintenance – losing 66,000,000 €/year!!! An improvement by 10% would generate over 6 million € is reduced costs or improved business value.
What is fascinating is that instead of trying to improve planning (to increase usage of resources), many IT organizations see the answer in outsourcing to get cheaper resources – not solving the actual problem of the leaking resource management. It is accepting the bad planning, the need for excess resources and trying to cover the waste cost with cheaper resources. A couple of years ago, I worked in an outsourcing set-up with exact this problem of leaking resourcing planning – and we hoped that an outsourcing would solve the problem and raise productivity. But the truth is that the outsourcing made the situation more complex and did not solve anything. In fact, the biggest dispute was about who would pay for the excess resources due to bad planning. It took years to settle the disputes and change the planning methodology. I sometimes wonder if my employer gained anything from that outsourcing deal.
What is the reason for this behavior? The answer is quite easy. To solve the leaking resource management issue requires change and a new governance style. It is much simpler to complain about high cost levels than actually doing something about it. But changing governance structure is tricky and requires a new mindset challenging “selected truths” and traditional models for resource planning. The question is if IT organizations are willing to take the cost of poor planning (40% non-utilized resources) to protect their current governance structure? What is your decision?
The Goodwind Company’s point of view is that increased resource utilization can easily be achieved but it is important to understand that the root cause to poor productivity is a management issue and a not particular a tool or process problem. Therefore, we must address all dimensions of IT governance and steering to achieve a change. We see many organizations investing in new tools but not achieving any productivity improvements – mainly because the starting point is wrong. It is about understanding the Plan/Do/Check/Act cycle of resource planning, and how the governance enablers (conceptual design, leadership & culture, skills & competence, processes & tools, information flow and time perspective) influence the resource planning and business value creation. Also, to understand that change is not achieved over night but rather over a period of time where the governance is slowly changing with experienced coaching and transparency of plans and results. Change is never easy, but needed to improve resource utilization from a current level of 60%. What is the alternative?
The Goodwind Company, together with Ln4 Solutions, have designed a proven approach to raise productivity levels by double digits. It is combining best practice resource management methodology and tool to match demand and supply of IT resources in an efficient way, and a performance management framework to achieve sustainable change in governance structure. We see that it is the change journey in the IT organization to be the best approach to raise productivity and therefore, we stress the importance of productivity coaches to drive change in the It organization based on best practice frameworks.
- Ask yourself – what is the resource productivity level in your IT organization? What is the root cause to that level? What are the business effects of poor productivity levels?
- Ask yourself – are you will to challenge your current governance structure in order to raise productivity? Are you willing to challenge your “selected truths”?
- Contact The Goodwind Company to learn more about unique approach to raise productivity in IT organizations! We have designed an introduction package to quickly analyze the situation and calculate the current productivity levels. Give us a call – probably the most profitable call in your career.
A few days ago, I went to the supermarket to do the weekly shopping. Imagine if 40% of the groceries would fall out of the car on the drive back to the house. There are two ways to addressing the problem – either we buy 60% more groceries, or we close the car door hindering groceries to fall out. I think that most of us would select the second alternative – but many IT professional go in the other direction. Isn’t it time to find the “open door” in the IT organization and close it once and for all? That is the quest The Goodwind Company has embarked on – and we are here to help you. Are you ready?
– Hans Gillior