Are you overstocked?

Staff are the highest fixed cost in any company, and IT departments are no exception.

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Are you overstocked?
By  Abhijit Pendse Published  January 18, 2011

Staff are the highest fixed cost in any company, and IT departments are no exception.

Size of the IT department is always a bone of contention. A lot of CIO’s feel that their organisation is unique and has special technology needs and thus justify more resources in the IT department. The business functions tend to feel that IT is overstaffed and needs to get its act together to cut the flab. The truth usually lies somewhere in the middle. So how should CIO’s determine the right size of the IT department? And what needs to be done to operate at the optimum size?

An IT department is typically aligned to four main areas: infrastructure – which includes help desk and system administration, support and maintenance of applications, project management and miscellaneous functions, such as information security, quality control and so on. While there are no mathematical formulae to tell you the exact number of people you need in each of these functions vis-a-vis the number of users or systems, there are benchmarks and best practices which the CIOs should be cognisant of. Let’s take a look at each of these areas.

Infrastructure: Usually 30-40% of the IT staff resides in this bucket to support the computers and network infrastructure (CNI). If there is one area in IT where exhaustive analysis has been done, it is this one. Modelling tools have also been developed by some of the consulting and hardware vendors to help arrive at staffing numbers. Industry benchmarks (ratio of IT resources to the end users) exist for the various areas in this bucket. The typical numbers of IT resources required are 1:100 for helpdesk, 1:125 for system administrators, 1:125 for hardware maintenance and 1:300 for configuration management. If these ratios are combined, overall ratio for the Infrastructure comes to around 1:40 to 1:60 which suggests that 1.5-2.5% of the total staff of the organisation is required in the Infrastructure area.

Application support and maintenance: This bucket typically has the maximum IT staff and comprises of 40-50% of the total IT staff. This would include the external resources such as contractors, consultants and system integrators.

Project management: This function is unique in its nature and the strength may vary depending on the underlying projects. In a stable environment, it is 10% to 15 % of the IT staff.

Infomation security and QC: These are typically small functions with not more than 5-10% of the IT staff. Overall if the ratios are rolled up, the total employees in IT as a percentage of the total organisation strength comes to around 4% to 6%. Most of the organisations in Middle East have IT headcount in this range.

Anything above this range the CIOs should be worried and anything below, the CIOs needs to be cautious. The key things to consider when benchmarking the IT department are the size of the organisation, the IT initiatives under execution and the maturity of the core systems (ERP, core banking etc.). Smaller organisations have higher percentage of IT resources as they do not have the advantage of economies of scale. Also if there are any large transformations projects, IT teams tend to be bigger. Unstable core systems also result in larger support teams.

However the trump card in getting the size right is correct implementation of IT processes. Processes in key areas such as support and service delivery management, change management and project management if implemented correctly not only contain the size of the IT department but also ensure stability of the function.

Abhijit Pendse is a Senior Engagement Manager at Cedar Consulting International.

2685 days ago
Vinod Mehra

I believe the cost & time can be considerably reduced and quality enhanced through intelligent outsourcing the support services

2714 days ago
James from Application-Support.co.uk

Application support costs can be reduced by engaging suppliers to support applications remotely. You still receive the same level of support but save the cost of each desk. A desk location in a central business district can cost tens of thousands of dollars per year and that's before you have even started paying for support skills.

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