IT People – Flexible Staffing Part 1

IT People – Flexible Staffing Part 1

A topofmind topic coming up with my clients these days is resourcing temporary labor. IT talent is at a premium driving a renewed focus on talent acquisition. As such, companies are utilizing temporary employees more than ever. I’ve worked with companies where more than 50% of their staff is comprised of temporary resources. 

There are many good reasons for using temporary labor ranging from speed to acquire specialized talent to ease of staff reduction when the need no longer exists. As easy as it sounds, there is more to consider than just calling up your local temporary staffing agency and handing over the requisition. 

Lets start by asking ourselves, “What type of temporary employee is needed? 

Over the last decade the lines between consultant, contractor, outsourcing, and staff augmentation have often been crossed. The recession has further blurred the distinction as laidoff IT employees have re-branded themselves as “Independent Contractor” or “IT Consultant” in their attempt to bridge the gap between permanent employment engagements. The outsourcing industry has brought us multi-year agreements that often exceed multiple millions of dollars. To add to the confusion is the gig mentality of today’s millennials.   

I like to refer to these temporary resource categories as “Flexible” since capacity can flex based on business demands and downturns. As an example, I have provided suggested applications and characteristics of each resource category below. Also, I have strong and often conflicting views of outsourcing. Therefore, I will reserve my perspective on outsourcing for a later conversation. For now, we will look at the top three levels in the pyramid – Consultant, Independent Contractor, and Staff Augmentation. 

What is the difference between Staff Augmentation, Contractors, or Consultants? 

We refer to Wikipedia for a definition: 

Staff Augmentation is an outsourcing strategy which is used to staff a project and respond to business objectives. The technique consists of evaluating the existing staff and then determining which additional skills are required. One possible advantage of this approach is that it may leverage existing resources as well as utilize outsourced services and contract workers.” 

“An Independent Contractor is a natural person, business, or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal agreement. Unlike an employee, an independent contractor does not work regularly for an employer but works as and when required, during which time he or she may be subject to the Law of Agency. Independent contractors are usually paid on a freelance basis.” 

“A Consultant (from Latin: consultare “to discuss”) is a professional who provides professional or expert advice in a particular area such as security (electronic or physical), management, accountancy, law (tax law, in particular), human resources, marketing (and public relations), finance, engineering, or any of many other specialized fields. A consultant is usually an expert or a professional in a specific field and has a wide knowledge of the subject matter.”  - Wikipedia Online Dictionary 

Staff augmentation is based on the concept of a “commodity, easily replaceable skill” that is available for an entire category of labor (Administrator, Engineer, Programmer, Database Administrator, Web Designer, etc.). Since IT relies on a large labor pool of technical skills, these are considered low priced roles. In this case, participants are required to have only the required skills for their specialty. They can be hired and released pretty much on demand. 

IT contractors are further up the pyramid in capabilities and value. They are typically companies that deliver an end to end service or system to solve a clearly defined need. This may include such services as a specific operation, application, virtualized infrastructure, or network operation. In many instances it is delivered as a complete package, including hardware, software, utilities, installation, configuration, and testing. Contractor services may be purchased on a per-project or a time-and-expense basis. 

At the top of the pyramid is the IT consultant. This is a professional service offering filled by a resource with highly developed skills and extensive experience in a specialized field. In addition to being a Subject Matter Expert for a particular technology or service, IT consultants are expected to have extensive knowledge of related activities that include business operations, project management, associated technologies, industry best practices, quality assurance, security, and other operations. They are sought out by organizations for their comprehensive understanding of business-critical operations or other activity than can have broader and deeper impacts. The need for highly specialized skills allows these resources to command a much higher rate than the other flexible staffing categories. 

It is in your best interest to understand the differences and capabilities of each category. Unfortunately, these titles are frequently intermixed and tossed around somewhat indiscriminately by organizations. Technical personnel do not automatically become senior consultants just because they self-title themselves with it. Unless due diligence is performed beforehand, a manager may believe they are contracted with a Senior Consultant for a high rate per hr. (plus expenses), when in reality they contracted a Staff Augmentation resource. This can quickly become the root cause of poor performance, missed expectations and objectives, and ultimately a failed project. 

Risks of a flexible labor pool – co-employment  

Before we wrap up our conversation of flexible staffing, let’s touch on an important issue – and that is co-employment. Co-employment is the relationship between two or more employers in which each has actual or potential legal rights and duties concerning the same employee. 

Co-employment issues arise when the client company extends its control beyond the staffing firm/client division of tasks and takes on the role of the primary employer. The issue with co-employment came to light in the now infamous Vizcaino vs. Microsoft case. This case was filed on behalf of several contractors to Microsoft who were labeled Independent Contractors, freelancers, and/or employees of “staffing” firms. 

The case grew into a class action lawsuit resulting in a $97m settlement in 2002. If you are curious to learn more here are two sites for your reference. The first is a copy of the legal brief, the second is written in layman’s language. 

We don’t want to overreact, but at the same time this risk is real both from an IRS generated inspection or an employeegenerated legal action. I have worked with other companies that faced lawsuits from independent contractors and staffing firm employees claiming entitlement to participate in company benefit plans in the aftermath of the Microsoft settlement.      

In Conclusion  

Flexible staffing is a key management tool that allows organizations to quickly react to business demands. The key is to manage the relationship with the contracted resource and to assure that appropriate management oversite and behaviors are followed. In the next few weeks, we will cover the implications of Co-Employment and the gig” mindset more in depth.  

Until next time, have a great week! To further this week’s conversation with meLet’s Talk!  

Mary Patry
IT Executive Advisor and Leadership Coach  
 480.393.0722 (AZ)

Let’s Talk sponsored by an IT Executive Coaching and Advisory practice targeting CIO’s challenge of leading and delivering business solutions with a focus on effective people and process capabilities. Discover the possibilities by scheduling a complimentary strategy session with Mary Patry. 

IT PEOPLE – Getting the Structure Right

IT PEOPLE – Getting the Structure Right

Every company has two organizational structures: The formal one is written on the charts; the other is the everyday relationship of the men and women in the organization. – Howard S Geneen  

Last week I opened a discussion focused on demand and resource management. Throughout the conversation, the overriding theme was the management of PEOPLE. It is almost silly to state it, but without people, companies cannot function. People can compensate for the wrong process or wrong technology. Process or technology cannot compensate for having the wrong people in place. 

Often, we hear the phrase, people are our greatest asset.” You will even see it stated as a core value or culture statement on some of the most visible companies’ annual reports and websites. My interpretation of these core values recognizes the essential importance of people to the success of their business based on mutual respect and benefit. It is employees who deliver value to customers and customers who bring profits to the business. Profits, in turn, result in growth and growth returns opportunity to the employees. It is all very circular. On a side note, I don’t believe this business cycle assumes job stability or entitlement. The reality of business cycles and circumstances no longer allow for that promise. 

With that, we will continue our discussion about IT people. As much as many of us would like to ignore it, the overall organizational model or structure is fundamental. Organizational structure provides the foundation of how people work and interact with each otherIt also provides the foundation for the way work is divided and how the IT resources interact with the business. Despite variations of flavors, there are only three basic structures – centralized, decentralized, and federated. 

Let’s get started by providing an overview of the basic structures: 

Centralized IT brings all technology decisions, cost, and management into one shared service operation. This structure is favored by some CIO’s as there is the perception of retaining the most control. The promise of a centralized IT organization is reduced costs and risk, as well as increased information visibility and business process consistency across the enterprise. Unfortunately, the benefits are rarely realized. Successful centralized IT Service Delivery is dependent on IT’s ability to respond to the business units and local operations needs without sacrificing the benefits of centralized control and prioritization. 

Decentralized IT organization is the exact opposite of centralized. You will most often see this structure in large organizations built through acquisition. It was most common in the 80s and ‘90s during the height of the merger and acquisitions era. IT operations are allowed to remain intact under businesses operating as wholly owned subsidiaries. Basically, the only central IT function is financial reporting. The promise is a faster time to delivery due to decisions residing locally. This promise drives expenses 40-60% higher due to increased technology costs, labor costs, and decentralized procurement. At the same time, inconsistent functionality impacts integration between business units. There is generally a divisional CIO with a dotted line reporting back to a corporate CIO. Having sat in this divisional CIO seat, I can attest that it is a tough seat to fill. 

Federated organizational structure is an approach that allows interoperability and information sharing between semi-autonomous decentralized business units through shared information technology architecture. The intent is to provide the highest level of autonomy to manage complexity and costs, while at the same time allowing agility at the local business units whenever possible. A Federated model has a small core team that manages technologies to be shared by all the business units. 

One of the largest issues the CEO has is frustration with CIOs when IT is not in touch with the business. If all IT resources are pulled into a single shared services group in the name of greater cost control, production control, and risk management, they risk losing connection to the business. A federated structure is sought out to preserve the strengths of the centralized models (economy of scale) and the decentralized (flexibility) models. It promises centralized cost and control benefits, but maintains alignment contact through business-relationship managers who make sure that business needs are heard and addressed. 

Each organizations unique business needs will determine what IT functions are centralized and what functions stay within the business unit. In a federated organization, you centralize those things that everybody would agree make sense to centralize – infrastructure, networks, databases, common systems such as email, collaboration, financial, payroll, HR, etc. The things you decentralize are the applications that are directly in support of meeting unique business objectives. Then there’s a whole bunch of stuff that people could debate over whether they make sense to centralize or decentralize, like help desks and application maintenance. 

While an organization’s structure is in design, an important parallel activity is to address the IT governance process. In a federated organization, you will also need a federated governance process. Such a process says that IT decisions, such as what projects are done, what projects aren’t doneand how much money is invested in certain projects, are made jointly by IT and the business units. 

There is no right or wrong design, nor will one design always be static. Organizations are always evolving. These structures are NOT exclusive to IT nor are they driven by CIO’s decisions alone. The business organizational structure and practices will provide the first clue as to which IT structure will make the most sense. I’ve personally witnessed the chaos created when IT leadership attempts to move a highly decentralized IT organization to a federated model while trying to avoid the challenges of addressing the overall governance model at the business leadership level. It just doesn’t work. 

This was just a highlevel view of the basic structures.  Please feel free to contact me if I left questions in your mind. 

From here we will weave our way through the back alleys of recruiting, sourcing, team building, performance management, and where ever else our interests might take us. I am really looking forward to our conversations about these topics and more! This is about you. Not about me. So please – talk to me! 

Until next time, have an effective week!   

Check it out:  It is not enough for corporations to have IT systems and expect them to deliver strategic value to them. See our complimentary IT Governance and IT Strategy Frameworks to help you to help you regulate, monitor and govern the value of your 2019 IT decisions. Download here 

Mary Patry
IT Executive Advisor and Leadership Coach  
 480.393.0722 (AZ)

Let’s Talk sponsored by an IT Executive Coaching and Advisory practice targeting CIO’s challenge of leading and delivering business solutions with a focus on effective people and process capabilities. Discover the possibilities by scheduling a complimentary strategy session with Mary Patry. 

IT People – Doing too much with too little

IT People – Doing too much with too little

The “P” in PM is as much about People Management as it is about Project Management. Cornelius Fichtner 

We’ve all heard the overused phrase “Do more with less.” 

The road is only so wide. 

It is a real conundrum. In an attempt to drive profitability, companies need to keep headcount to a minimum. IT leaders cringe when an employee resigns as they may not be allowed to backfill the role. In many cases, workers assume responsibilities that don’t match their skill set. Those left behind take on the pressure of additional workload without complaint, out of gratitude for having a job, and out of fear of losing the job they have. 

At the same time, companies are looking to drive productivity and profits through innovation which places more stress on the same pool of workers teetering on burning out.  Burnout is a top driver of stress. Stress breeds sickness. People come to work when sick out of fear that taking time to recover will further impact productivity. It is a vicious circle. It is unsustainable in the long term. In today’s high demand for technology work, it is also irresponsible on the part of the employer.  

Information Technology workers are frustrated. Many times, they are required to maintain their production environments while being asked to deliver new technology solutions required to drive business innovation. They are torn as they want to do a good job, but often, there isn’t enough time in the day. In some cases, they don’t have all the skills needed. Projects invariably fall behind, and managers spend more time keeping projects on track. IT executives struggle to manage customer expectations. The vicious circle continues. 

It all comes down to resource and demand management. Many times, we think of these disciplines as the same. They are connected, but distinct. Let’s start by discussing demand management. 

Demand management is balancing orders for its products or services with its ability to produce them in terms of resource or scheduling constraints. Without managing demand, a company might produce too little or too much. Driving more production than resources can handle will most likely create quality issues resulting in customer dissatisfaction. 

 Though IT is not a business in the purest sense, it is comprised of resources that produce highly complex products and services. The request for services is generally well understood with project requests in the queue for months if not years in advance. Most of the time, as IT leaders, we do a fairly poor job of managing supply against demand. I challenge any IT leader reading this to answer a simple question: “What does your resource utilization look like over the next quarter, much less the next year?” 

We spend a great deal of time and effort on the supply side (the howproject management, software development, asset management) to the detriment of the demand side (the what –  capturing and prioritizing demand and having the knowledge needed to assign resources based on business objectives). We believe our criteria for success is delivering the many projects demanded of us, on time, on budget, and within specification. IT is rarely held accountable for the delivery of solutions that drive business results. 

Right now, many of you are asking – what does this have to do with resource management?   

Resource management is the effective deployment of resources when and where they are needed. In this case, let’s focus on human resources. Human resource planning begins with a forecast of the number and types of employees needed to achieve the organization’s objectives. Planning also involves job analysis, which consists of the preparation of job descriptions and job specifications. A service or product requires specific skills sets and the time required from people to maintain them.  

 We can expand the boundaries of time required using productivity tools, but these tools most often will increase the skills required to operate the tools. These productivity tools do not take away the physical capacity needs, and they do not increase hours available in a day. It is the primary responsibility of the IT manager to understand the capacity and capability of the resources balanced against the demand for their skills and time. 

The Project Management Institute (PMI) through the Project Management Body of Knowledge (PMBOK) supplies a formula for demand management that requires data outlining the demand for resources, a forecast by period into the future, and the requirement for skills mapped against the supply of resources availability - again forecasted by time. Rarely have I seen these tools or techniques applied to the demand for resources needed to support and deliver IT. 

Instead, I see IT managers without the necessary skills and techniques needed to manage resource utilization against demand resulting in overworked and stressed team members. Overworked and stressed team members will only guarantee dissatisfied customers and less than optimal results. You will see an exodus of your best employees. Neither is the outcome we want from doing more with less. 

You can count on it. 

So, what do you do?  We will lay out some of your options next week when we discuss resource management approaches and techniques. 

 Until next time, have an effective week!  

Check it out:  It is not enough for corporations to have IT systems and expect them to deliver strategic value to them. See our complimentary IT Governance and IT Strategy Frameworks to help you to help you regulate, monitor and govern the value of your 2019 IT decisions. Download here 

Mary Patry
IT Executive Advisor and Leadership Coach  
 480.393.0722 (AZ)

Let’s Talk sponsored by an IT Executive Coaching and Advisory practice targeting CIO’s challenge of leading and delivering business solutions with a focus on effective people and process capabilities. Discover the possibilities by scheduling a complimentary strategy session with Mary Patry. 

To Digital Strategy or not to Digital Strategy, is it not still an IT Strategy?

To Digital Strategy or not to Digital Strategy, is it not still an IT Strategy?

“It is a great time to be a CIO. IT, as a discipline, has emerged to being a business weapon. Never before has this role been as important inside businesses. You shift the thinking from being a cost center, and you are a party responsible for driving and enabling the company’s business strategy. The opportunities are endless.” – Trevor Schulze, CIO and VP of IT at Micron Technology,  

Every IT periodical publishes articles about the importance of it. Every software provider asks every IT Executive about it. Every IT Executive is expected to have one. The infamous, but not yet well understood Digital Strategy. What is it?

I was trying to recall the first time I heard the phrase – Digital Strategy. I could not remember when it was. I can remember where I was – at a CIO leadership conference. I clearly recall a lunch table of IT leaders sitting around talking about it and wondering what the hype was. Assuming we all agree that digitalization is simply the application of new technologies to automate business processes, hadn’t we always been “Digital”?   

It took me a while to get the hype, and some might say I am still tripping over myself on it.  

 I get that digital strategy has a much broader meaning and is becoming more and more of a priority to the CEO and the business in general. It is not about a new way of doing business as much as it is about how we apply technology to support the business.  

 Generally, a strategy is a plan designed to achieve business goals via the implementation of key initiatives. A digital strategy expands on the strategy to outline a plan for all the elements of a company’s digital and online suite of tools, and how they will apply them to build your business. When writing a digital strategy, it’s important to think up front about what you are trying to achieve.    

 ‘Digital” is not the end game; it is a tool used to advance the business. It includes creating a vision around how online systems will fulfill the business and external stakeholder needs. With that said, the digital strategy must be part of the business strategy.  

 Here is where I go off script from many   

 The IT strategy is an extension of the business strategy. In today’s world, these strategies must account for the digital needs of the organization. It is impossible for me to see how the strategies can be effective if built independently.  

 Most importantly, what is the CIO’s role in partnering with the CEO and other business leaders in developing the IT Strategy? Gone is the original role of the CIO to keep the lights on and the ship running. Yes, they must build and maintain solid back end core systems, but those responsibilities are table stakes.   

 With an emphasis on digital transformation, the CIO has an opportunity to advance the company’s goals by leveraging digital technologies to streamline the business and engage employees and customers.    

 It is a journey and takes focus. The journey starts with the CIO’s active participation in the development of the business strategy and the imperatives needed to deliver the digital strategy. From there, the IT Strategy is built to deliver functional business needs.   

In all sincerity, if my view is too simplistic and misses key learningsplease, shout it out. I am listening.   

 In the meantime, I am offering you my own tried and true template that I use in helping IT leaders build their strategy. Schedule time with me if you want to discuss applying it  Download your complimentary strategy building template here…. 

 Until next time, have an effective week! To further this week’s conversation, feel free to schedule time with me
and let’s talk! 

Mary Patry
IT Executive Advisor and Leadership Coach  
 480.393.0722 (AZ)

Let’s Talk sponsored by an IT Executive Coaching and Advisory practice targeting CIO’s challenge of leading and delivering business solutions with a focus on effective people and process capabilities. Discover the possibilities by scheduling a complimentary strategy session with Mary Patry.