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The incredible shrinking IT department

The incredible shrinking IT department

How skill changes and relationship management are reducing head count in many IT departments

When Vito Forte started in his role as CIO at Fortescue Metals Group 18 months ago he was heading up a function that supported around 1500 users.

Today that number has blossomed to more than 6000, but Forte’s IT function has not increased its headcount by anything close to that ratio.

“We’ve had to make sure we can help the organisation grow, without being a barrier,” Forte says. “The only way that we can do that while keeping our overall unit rate down is to utilise smart external services.”

Forte has chosen to hone his function’s focus down to doing just those things that it actually needs to do, and handing many activities off to partners and utility service providers (cloud).

He says the fact that he can do so is directly attributable to the maturing of those utility services such as cloud computing.

“As a team, our focus is on trying to look at all of the things that we shouldn’t be doing anymore, and what can be done through some of these newer-style services that deliver better value, are more flexible and have better commercial outcomes,” Forte says.

“As the maturity of the cloud market in all its various forms increases, the need to do the stuff that we were doing a year or two years ago is now starting to diminish.

“As an organisation we’ve got some pretty aggressive targets to hit, and we’re trying to do that by keeping our headcount down. So it’s really a case of looking for all of the points of leverage that we can find to deliver the productivity gains that we are looking for.”

Unlike some of his peers, Forte is in the fortunate position of supporting an organisation that is experiencing rapid growth, albeit slightly less aggressive recently. While this seems to indicate that budgets are less constrained, this is not the case.

“We need to stay relevant, effective and efficient because our competition is no longer outsourcers, but cloud services,” Forte says.

“The business can just go direct for a growing number of services, so we need to stay sharp, and demonstrate value constantly. We will be facilitators of these services into the future and the place to be is in the middle.”

At other organisations, particularly in Europe and the US, the driver is one of needing to do more with less, as cost pressures force them to look for alternative service provision models.

Either way, it equates to a trend where IT functions are providing often superior service with fewer resources than were needed only a handful of years ago.

This is reshaping the composition of the IT functions and the skills they require. In some cases it is also leading to a reduction in the size of the overall IT function.

In a speech delivered in Perth in June this year, titled ‘Industry Disruption and Cloud Computing’, Frost & Sullivan vice president Andrew Milroy outlined how the cloud and related technologies can reduce the ultimate numbers of staff needed, although he emphasised how for many organisations that was likely to play out as a change in the skills mix.

“Process management, compliance and enforcement of company policy will be the kind of activities that IT departments will focus on more and more,” Milroy says.

“IT departments as we know them will shrink but these people may focus on different tasks.” At Fortescue, Forte has implemented a range of cloud-based services, including cloud-hosted email and service desk systems, and is investigating cloud-based recovery and analytics capabilities.

The company has also created its own internal cloud to ease provision of resources to business units.

By taking these services into the cloud, Forte has been able to reorganise the skills requirements of his function.

“The kind of skills that we will be looking for are more around delivering solutions rather than infrastructure,” Forte says.

“Our infrastructure team is actually really small in comparison to the size of the organisation, and that isn’t going to be growing, because we are using additional services to fill the gaps.

“The people we do have, we are trying to get them to move further up the value curve, so we get more out of them for the business.”

What doesn’t change, however, is the application support role, although Forte says there is less emphasis on the backend operational aspects and more on functionality, effectiveness and utilisation.

Greater reliance on external parties has also increased the emphasis that Forte places on vendor management.

“What it does do is you bring them closer – they are much closer than they probably were in the past,” Forte says.

“And you have to make sure that they are very clear on your objectives, and that you are very clear about what they can deliver for you. “That’s a constant conversation.

You build a lot of relationships with those service providers that are probably slightly different to what they would be in a traditional sense.”

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