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Switch IT to act as a separate company

By ehab.fekry ·
Having IT dept working for 4 companies within the same group raise questions of how to allocate IT expenses, from which company take the budget....
after a negotiations with the group management it was agreed on transferring the IT dept to act as a separate company giving service to all companies, it was requested to prepare a proposal for the new IT company; the proposal should include:
Organization chart
Job description
Scope of work
Salary scale...
If you can help in this; put your ideas to be discussed

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Some thoughts

by Oldefar In reply to Switch IT to act as a sep ...

Sounds to me like the real business objective is to establish a fair approach to the allocation of IT expense. This is a good starting point.

The business requirements will include service definition, service level agreement, usage measurement, billing units, and addition of new services. Within these you will need to address issues such as asset ownership of hardware and software, and technology refresh. What is important is to get a specific set of business requirements from each company involved, and to keep it focused as much as possible on business rather than technology. Word processing, rather than Word 2000, email rather than Outlook, customer database rather than Oracle 8. At the same time, you need to know exactly what they are currently using.

Approaches depend on what can be leveraged and what cannot. The combined business requirements from each company is what you have to work off of. For example, support of desktops with a common operating environment will reduce cost and effort if all 4 companies use the same OS and basic software suite. However, if each is unique then the support costs for an office environment will have to be determined for each company. The same follows for email systems, application servers, and database servers. Will you be able to use common platforms, or will you have to dedicate platforms to a customer.

Now you start getting into some of the real issues for IT billing. Approaches include a per seat aggregate cost ? flat rate per user that includes all costs, basic rate plus cost for usage, inclusive trouble calls or pay per call, etc. Each has advantages and disadvantages. The more detailed the billing, the more costly your billing overhead.

With a pretty good idea of what you are supporting and how it is being billed, you can begin looking at your stated issues. Since you are only acting as a separate company, you should be able to eliminate or get specific costs associated with businesses.

So you have what defined, and now you need the how. Map out functions associated with the environment first. Consider skills and levels required. Group the functions by shared or similar skills and levels, and then look at how many individuals with this profile will be required. This builds your organization chart, and gives you the information you need to define salary needs. Next comes the team alignment. Support tends to align best by shifts, while development aligns best by projects. The teams determine the additional management positions needed and fills out the rest of your chart.

As a general rule it is a good idea to aggregate as much as possible into a flat rate, and then bill exceptions above this. Keep in mind that by acting as a separate company you give more power to the other business managers. You will have to accept their business decisions and adjust both your operations and your rates accordingly. The best thing to do is team with them so you can offer suggestions to their requirements that have the least risk and cost. It may seem an added expense, but a customer relationship manager that interacts daily with the 4 companies is needed to keep communication lines open. Depending on the size and locations, you may need one or one for each company.

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