The Elastic IT Staff

Smart CIOs are applying the lessons of just-in-time inventory and portfolio management to IT staffing. The result: maximum flexibility and minimal trauma.

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.

"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, 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, 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, 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, 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."

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