IT Assessments: An Interview with Plante & Moran’s Doug Hockenbrocht

By Doug Hockenbrocht

Technology Strategy
Universal Advisor, 2004 Issue No. 1 

Are you spending too much on information technology (IT)? Do you have an appropriate number of IT staff — staff with the correct skills who are working on the right things for your business? Do you know how your IT spending and staffing compare to organizations like yours?

Insufficient answers to these and other questions often drive organizations to call on an objective, experienced firm to conduct IT assessments. What is an IT assessment? Why pursue an IT assessment? What are the benefits? Plante & Moran’s Doug Hockenbrocht recently shared his insights.

I suppose the obvious question is, “What’s an IT assessment?” What does it entail?

DH: An IT assessment is the precursor to an effective IT strategy, where management, users, and IT provide input into the future of the enterprise’s technology environment and investment. However, before you can develop and execute that strategy, an enterprise must assess and understand its IT organization — how the organization is administered, the capabilities of its technologies, and how well all of the elements of IT support the enterprise’s strategic business plans. By placing a business context around the strengths and weaknesses of IT, the enterprise is able to focus the IT strategy on those areas that create the most value for the organization.

So anyone in the process of creating an IT strategy should consider undergoing an IT assessment?

DH: That’s one reason, though many organizations simply want tactical advice or a “check-up” on how they’re performing. Although all situations are unique, companies tend to be concerned about the same types of things — how much money they’re spending on IT, how many IT people they should or shouldn’t have, what the skill mix should be, and whether or not they should consider outsourcing a portion of IT. Research firms study $500 million and above sized organizations relative to IT performance but primarily fail to address organizations under that threshold. It’s with these organizations that we place our primary focus.

And you sit down and help them determine how they measure up?

DH: Exactly. An IT assessment can cover as many as 50 different items — administrative, organizational, and technology items. We have a scoping process and tool that includes all of these items, and we sit down with the organization to mutually determine what’s relevant to them. The typical scope includes 15-20 items.

At that point, we begin our assessment, which consists of documentation reviews, interviews with IT people, and interviews with executives and key users — because sometimes there’s an alignment or satisfaction issue with IT. Internet-based surveys are also used to efficiently gather input from geographically dispersed users/IT personnel.

We then start comparing the client to similar clients in our database. Typically, we deliver a final report to the executive(s) who hired us and they, in turn, use our recommendations to provide direction to the IT organization.

The entire process can take as little as a week and as long as eight to ten weeks depending on the desired scope.

Could you give me an example of one or two organizations for whom you recently completed IT assessments and the subsequent benefits to those organizations?

DH: One fairly recent example is a $200 million, Tier 2 automotive supplier, who came to us with four issues: “Should we consider a new hardware platform or new enterprise software system, or is the current environment conducive to growth? Are the current IT staff equipped to accommodate our operational, technical, and support needs? What’s the related impact of the planned addition of an IT Manager? And are there significant gaps with the current technology that would benefit us?”

Through our assessment, we provided them with recommendations for each question. We recommended that they stay with their current environment, given the fact they had yet to fully optimize what they’d already invested in; that they should hire an IT Manager from outside the company versus promote from within; and that there were some specific improvements within networking and security they should consider.

I think the most valuable thing we did for them was to give them direction regarding personnel — realigning the job description, and helping them bring a manager in from the outside. We recommended they not invest in new technology they didn’t need, when they weren’t reaping the full benefits of what they had. We also helped them formalize their Help Desk by providing them with some procedures to adequately address the organization’s needs. To those ends, I know they were very pleased, as they’ve served as a reference for us several times since we finished the project.

Do you have any other examples? Maybe something from a smaller organization?

DH: Absolutely. We recently worked with a $70 million Tier 2 automotive and leisure industry supplier who wanted us to assess their IT spending level against similar-sized organizations. In addition, they wanted us to assist in establishing an IT structure that facilitated continued stability and success, taking into consideration the impending retirement of the CFO/IT Director.

We found that their spending was, in fact, higher than comparatively sized clients. However, their system was older and had been modified/customized over time, so their business system was unique to their company. They needed to have programmers on staff, which drove up their salary and wage expenses and thus made their IT costs higher than other companies. But at the same time, they would’ve had to make a significant investment to change systems and eliminate the programmers, which didn’t justify a couple of tenths of a percent savings. So, we concluded that it was acceptable for their spending to be higher.

And the IT structure?

DH: Their CFO/IT Director was retiring, so the big questions was, do they split the position? We recommended that they split it, as IT needed a manager-level individual who was clearly responsible for IT. In the process, we created a structure where the IT people were located centrally in a Michigan plant and appointed “business unit liaisons” in the other local/remote plants to interact directly with the IT people to ensure the needs of the plants were adequately met.

In coming up with this new structure, we also realized that the help desk needed more formal policies and a help desk logging application to communicate the value of their support efforts.

So they had a record of what they were doing for the organization?

DH: Right. This is a common problem. IT people often fail to effectively demonstrate their value to an organization. They typically do one of two things; they’re proactive, and work on projects, or they’re reactive, and respond to incoming calls. Usually 60 percent to 70 percent of the time, they’re taking calls, and if there’s no record of this, then an owner/senior executive of an organization may begin to question the value IT is providing. We help the IT departments implement approaches for communicating their value.

Your expertise is in manufacturing and distribution; do IT assessments apply to other industries as well?

DH: Absolutely. Our practice has conducted assessments for schools, government entities, services firms, health care facilities, financial institutions — the list goes on and on. We’ve done them for departments with one staff member up to several dozen. Companies can be as small as $10 million, and as large as $500 million. They could have one facility; they could have several. It really doesn’t matter; the process we use is very scalable.

Anything you’d like to add in closing?

DH: We want to see organizations optimize their technology resources. We see so many organizations struggle with IT issues and because of this experience have developed proven solutions that your organization can leverage as well. If your business can benefit from a perspective that’s independent of your organization and of technologies, please contact me.