How to 'rightsize' your IT organization

With all the variables involved, determining head count in an IT organization is not an exact science. But this spreadsheet can help you determine appropriate numbers.

How many IT personnel do you need in your shop? Because so many variables are involved, there’s no quick and easy formula that yields a surefire staff number. But if you work through a few key questions and complete the assessment spreadsheet provided by Mike Sisco, you’ll get a more accurate idea of what you’ll need. The spreadsheet includes a blank template, an example, and brief instructions to get you started.

Determining staff size is complicated. Even two companies of the same size in the same industry, with similar revenue and client bases, may have markedly different IT needs, depending on the variables surrounding their businesses.

Let’s say Company A has a homegrown billing application with relatively little billing and reimbursement automation functionality. Company B uses a vendor-supplied application that has significant automation built into the programs. Both companies support roughly the same number of clients and provide essentially the same services.

On the surface, it may look like these two companies’ IT needs would be the same. However, the two variables of the level of billing automation and the differences in support of the business applications create a huge difference. Company A not only has to have more programmers to support its applications, it also needs to initiate billing automation projects that require programming resources. In addition, because of the lack of automation, Company A’s billing and collections department has to be much larger.

This additional clerical staff costs more than that required by Company B and places additional pressure on Company A’s financial performance—which works against spending more in IT. It can be a vicious cycle until the company breaks through and begins to automate more of the business. The bottom line is that Company A probably needs two to three times more programming resources—resources that will, at least in the short run, provide considerably less application support to the business. If these companies have aggressive growth plans, Company A has a lot of catching up to do.

Key variables define the need
Determining the appropriate number and type of IT staff is very much a balancing act. Variables to consider include:
  • Number of users
  • Physical location of users
  • Skill level of users
  • Number of servers
  • Distribution (physical location) of servers
  • Stability of the technology infrastructure
  • Industry
  • Number of business applications
  • Type of business applications (developed internally, vendor supplied, etc.)
  • Level of individual customization in supported business applications for clients
  • Stability of the business applications
  • Level of automation in the business applications
  • Databases supported
  • Operating systems supported
  • PC, workstation, dumb terminal quantities and mix
  • Company growth planned
  • Number and type of IT project initiatives underway to support company goals
  • Number and type of projects planned that affect IT
  • Strength in the department manager positions
  • Company’s ability to pay for IT support
  • Level of service you plan to deliver (response rate, services provided, etc.)

The process of determining staff needs
I usually group staff into six categories:
  • Programmers
  • Business application analysts and trainers
  • Help Desk specialists
  • Network administrators
  • Desktop support specialists
  • Data Center operations

Depending upon your company, there may be staff overlap in these categories, but for now let’s assume that the IT organization is of sufficient size to have a clear separation of these functions. In each category, I determine the number of resources needed at two levels.

The first is the “expert” level—a person or persons with several years of experience and maturity in each category. An experienced person leading each functional group will save you dollars and reduce your staff requirements because he or she will help you work on the right things and approach the work in a more productive manner. The second level is the number of support staff in each category needed to give you the critical mass and capacity to provide the necessary levels of support.

I determine my IT staff needs based upon a number of factors, including the workload, anticipated needs, current capability of the staff, and maturity of the company. As much as possible, I try to quantify all the variables in each set of issues. Ultimately, it’s a judgment call based on the variable data, the level of support that you need to provide, and your experience in managing IT. If you can quantify the variables that affect levels of support, you’ll be much better equipped to determine your true needs.

In my approach, I focus on one category of staff at a time, as listed above. (The spreadsheet will assist you by blocking out certain variables that don’t apply to a particular type of staff.) In each category, I ask a few key questions to focus my analysis:

1. Programmers
  • Is there a separation between application development and support?
  • Do programmers work on multiple business applications?
  • Are external clients supported, and if so, is there customized code for individual clients?
  • Are major investments needed in software development of critical business applications?
  • How big is the programming backlog, and what type of changes are being requested?
  • Can the key business processes be accomplished better and more economically with a third-party solution?
  • If you have external clients, can programmers be dedicated to and billed to specific clients?

2. Business application analysts and trainers
  • Are new applications planned?
  • Does the company support the installation of software for external clients?
  • How knowledgeable are the departments and clients in the use of their business applications?

3. Help Desk specialists
  • Are infrastructure calls separated from business application calls, or is the Help Desk support functions for both combined?
  • How responsive do you need to be?
  • Does the Help Desk have sound escalation procedures?
  • What’s the level of client satisfaction for IT support?
  • Is the response rate to solve user issues sufficient?
  • Do you have a tracking system to monitor support calls, trends, and responsiveness?
  • How many calls is the Help Desk handling now?
  • What is the percentage of local users (as opposed to remote)?
  • Does the company require 24/7 staffing of the Help Desk?

4. Network administrators
  • Are major changes or enhancements planned/needed for the infrastructure?
  • Is an experienced architect of the network in place?
  • What has been the history of implementing infrastructure changes?
  • Is there an infrastructure strategic plan?
  • Is a change management process in place?

5. Desktop support specialists
  • What are the company growth plans?
  • Are major changes planned/needed in the desktop hardware/software?
  • What is the percentage of remote users (other office buildings, cities, etc.)?
  • Is the response rate to solve desktop issues sufficient?

6. Data Center operations staff
  • Does the Data Center require 24/7 operation?
  • What are the requirements for the Data Center?
  • Is a “lights out” operation possible?
  • Is the Data Center secure?

Work through these key questions, add your own, and complete the assessment spreadsheet. When you’re finished, you’ll have a thorough understanding of the issues surrounding each staff type.

A question of balance
Your desire to run an effective and responsive IT organization has to be balanced with the company’s needs. The greatest challenge may be that the changes you see as necessary simply cost more than the company can afford. After you’ve finished your assessment of staff needs from a pure technical-support perspective, step back and ask yourself the following questions.
  1. How much can the company afford? I typically look at this in terms of monthly or annual expenses or IT expense as a percent of company revenue.
  2. Are there significant “past sins” that must be taken care of?
  3. If the company is planning major growth, what are the critical staffing pieces that must be addressed to position the company for such growth?
  4. Are major initiatives planned that will help the company’s financial picture by automating certain processes?
  5. Are key initiatives required to keep up with or to distance the company from its competition?

Get involved with your senior management team to answer these questions. Essentially, you must address two issues when determining your staff levels:
  1. Ongoing support requirements of the current business
  2. Technology initiatives required to support the company’s future

In many cases, you may have to help management understand the current staff’s capacity, especially if the company is expecting you to support the existing business plus position the company for growth or to implement initiatives to keep it competitive.

“Rightsizing” means staffing at an appropriate level today to meet immediate support needs while targeting your new-hire investments to help position the company for the future. You may have to drop an important project and start a new one that gives the company needed productivity and cost savings so you can spend more IT dollars later to do more things. Always remember that the CEO and CFO are focused on making the financial numbers. Your job as an IT manager is to figure out how to work within the financial constraints while building an organization that is responsive and proactive in helping the company position for the future.

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