Why Inefficient Corporate IT Departments Lose Money

"Hiding Behind the Logo"

Let us return now to those thrilling days of yesteryear, in the late 1990s, when dot-coms were arising from every basement, when startup loans were easier to get than a cold, and when a 1-day seminar made you an Internet guru.

It was also when many large corporations, hitherto excluded from the information highway, spent millions of dollars to become Internet savvy.

"After all," they would say with authority, "we are a prestigious and time-honored firm whose name is a household word. If we can't manage the information highway, who really can?"

I call this "Hiding Behind the Logo." Sure, it was a famous company that had been around for 75 years, but they had no infrastructure for running a web site, much less an e-business operation. So they hired contractors and consultants to do the job for them. Naturally, the consultants were often at odds with the corporate management, who did little more than toss money at their problems.

Proprietary Privileges 

For example, the managers where I worked didn't care about customer service. In fact, they didn't really care about their franchisees at all. Once the ink dried on the contract, the deal was done. If the franchisees didn't like the deal they got, they could go elsewhere. The only problem was, in most cases, there was nowhere else to go, because the company had a near-monopoly on the particular service they were offering.

Because they could treat their franchisees any way they wanted to, within the law, their customer service was incredibly lax. Therefore, the trouble-ticket queue usually had several hundred calls in it at any one time. Their company software was proprietary and the new help desk technicians were expected to learn it on their own. As you might guess, there was a considerable learning curve for anyone involved in troubleshooting.

Service, Schmervice! 

They would send people with no computer experience whatever to locations to do things like upgrade Novell operating systems. My first night on the desk, a field tech called up saying that a modem didn't work. I asked him if he had checked the serial cable. "What's that?" he replied.

When we had a question for the customer service manager, he would tell us "That's a known issue", which was his way of saying, "Add it to the queue and go on to the next one." If we asked him too many times, he would look at us sternly and say, "You don't understand how things are run around here, do you?"

So how did the company make money? The company made its money by devising schemes for putting their rivals out of business. Because of their huge market share and name recognition, they had the cash reserves, and if necessary, they could get a loan. If it meant putting a new store across the street from a rival store, they could afford that. If it meant lowering prices, they could afford to do that. Their software product was rarely updated; in fact it was 16-bit DOS software that ran in a Windows environment. So their development costs were as low as their help desk costs.

My purpose for relating all of this is to show how IT departments should not be run. In this case, project management, with its defined goals, quantified tracking of progress, scheduling, etc, was non-existent. The result? Both the service and product were second-rate, and there were plenty of smaller companies offering better deals, but the consumer had to take the time to find them.

Many businesses perceive IT as a necessity, but not a moneymaker.

In today's uncertain economy, companies are looking for a new kind of IT professional: One that they think is bringing in money for them. Most companies don't want to be on the cutting edge. They aren't necessarily looking for someone who turns their economic slump around. What they want is some clever character who will think up methods so that they can make a few extra bucks that they wouldn't have made otherwise.

The Open Source Alternative? 

For example, it might be cheaper for a company to hire an Open Source Systems Administrator. This person can download software for free. This way you don't pay Microsoft or whomever for thousands of dollars of software. An open source developer can write programs cheaper than buying them from people like Microsoft.

In Conclusion: 

The dot-com upstarts are gone, but there are still plenty of companies out there with inefficient IT departments. So, at this time there are two options for the IT person: 1.) Join a company that is producing new hardware and software, with the assumption that you can create a better product than the competitor's, or 2.) Simply show that you can operate IT so efficiently, that your company (law firm, hospital, whatever) can save money.

By: Roy Troxel

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