The wastage of human capital in IT operations

Maximising automation and the industrialisation of IT

December 2012

There is a huge amount of human expertise and time being wasted by the majority of IT operations teams. Increased automation is one of the most effective ways to overcome this problem. Only when the tools and services to achieve this are in place can the industrialisation of IT management processes begin. IT operations teams will then have more time to focus on transformation, innovation and deployment of new applications in the interests of the businesses they serve. This report presents research that underlines the scale of the problem and makes the case for more automation in IT operations management, rather than deploying more and/or cheaper labour. The report should be of interest to anyone tasked with the efficient management of an IT operation.

Bob Tarzey Quocirca Ltd Tel : +44 7900 275517 Email: bob.tarzey@quocirca.com

Clive Longbottom Quocirca Ltd Tel: +44 1189 483360 Email: clive.longbottom@quocirca.com

Copyright Quocirca 2012

The wastage of human capital in IT operations

The wastage of human capital in IT operations

Maximising automation and the industrialisation of IT
There is too much wastage of both human expertise and time in the way IT operations teams are managed. The automation of many mundane processes is possible with the right tools and services, allowing many procedures to be industrialised. Organisations that achieve this will have more time to focus on transformation, innovation and the deployment of new applications.

Businesses are now as reliant on IT as they are on other basic utilities Human capital is being wasted in IT operations teams The wastage of their skills is demotivating for IT staff The poor use of expertise hampers innovation Automation is one way to improve operations management Intelligent tools are needed for successful automation The investment needed requires board level understanding of the problem

Whether delivered in-house or from cloud service providers, whether physical or virtualised, IT infrastructure and the applications it supports are fundamental to any business. However, although the IT industry itself is now mature many of its management practices have not adapted fast enough to cope with this complexity, which is stifling innovation. 30% of an IT teams time is spent on low level IT tasks such as responding to minor user incidents, carrying out routine procedures or checking for errors. IT managers are aware of this and clearly more frustrated about the poor use of skills than they are about training employees to have those skills in the first place. IT managers admit that their IT operations staff members only use about 50% of the qualifications that they have and that it is just accepted that skilled operators will have to perform day-to-day jobs and tasks for which they are over-qualified. The two things IT managers would most like to achieve, if they could free up the time, are the modernisation of IT infrastructure and the delivery of new applications. Achieving both of these goals is essential to ensuring the businesses they serve remain competitive. Around 80% of infrastructure is common to most IT operations and the majority of tasks that need performing across them are routine rather than exceptions. One way to reduce the cost of performing such tasks is to use cheap, often outsourced, labour. Another is more automation. Only when tasks are automated can the regularly performed ones be industrialised. The IT management tools that support automation need to be capable of intelligent hand-off to selected engineers, when exceptions occur, based on skills and location. As IT infrastructure is increasingly located remotely from both end users and operators, it makes little difference if the tools are too. This has led to the rising use of on-demand management platforms. It is the responsibility of IT managers to understand the resources they have and how they can be better used. The boards that they ultimately report to are primarily interested in the capability of the applications that drive the business. To get the funding for automation the case must be made that the benefits to the business will far outweigh the costs.

Conclusion:
The ineffectiveness of many IT operations will spiral out of control if action is not taken to improve the way they are managed. Putting in place the necessary IT management tools, services and procedures to maximise automation and to industrialise processes will address this and reduce skills wastage. The ultimate value will be the ability to efficiently manage the increasing complexity of IT infrastructure, whilst delivering new applications that will ensure a business remains competitive.

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The wastage of human capital in IT operations

Introduction the maturing of the IT industry

It is almost 70 years since Thomas J. Watson, a past chairman and CEO of IBM, is alleged to have said I think there is a world market for maybe five computers. There is actually no evidence that he actually said this but, as his Wikipedia biographer points out, if he had made the prediction it would have held true for a good 10 years, rather than having been an example of culpable short-sightedness. However, from the early 1950s on, computers have spread from being used by a very small number of organisations to participate in every aspect of modern-day life. Most businesses are now as dependent on IT as they are on electric power. It is estimated there are now over 500,000 data centres worldwide, each running hundreds or thousands of devices (servers, storage systems and network/security devices). The rise of virtualisation often means multiple virtual machines run on individual physical servers and, in many cases, individual servers are being aggregated into private clouds. All this is increasingly being supplemented by resources procured from the providers of public cloud services. To keep up with this complexity the management practices of IT operations teams have had to evolve, but have they evolved fast enough? The evidence is that the average team is burdened with bad practices that slow it down, wastes resources and hampers innovation. The research presented in this report shows that 30% of an IT teams time is spent on low level IT tasks such as responding to minor user incidents, carrying out routine procedures or checking for errors (Figure 1). One of the biggest challenges for any business is to make the changes that can prevent this wastage spiralling out of control with IT staff spending all of their time either fire fighting or carrying out routine maintenance. The worse the situation gets, the more likely it is that IT departments will fail to deliver the new and updated applications that the businesses they serve need to remain competitive. There are a number of ways to achieve these goals. One is to keep throwing money at the problem and accept that wastage. Another is to introduce cheap, low skilled labour by outsourcing areas of IT operations management. However, that still leaves the problem of identifying who has the right skills to do which tasks and who should handle exceptions. So, a better approach is to move mundane and repetitive management processes away from being over-reliant on people, which exacerbates the waste of human expertise. Many such processes could be automated, including the ability to recognise exceptions. Only when this is the case can industrialisation be introduced into IT operations. This report discusses the findings of the research, underlines the scale of the problem and makes the case for more automation in IT operations management. The report should be of interest to anyone tasked with the efficient management of an IT operation.

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The wastage of human capital in IT operations

The wastage of human skills and time in IT operations

It may seem odd that an industry that is so focussed on helping its customers increase their efficiency should have practitioners that struggle with their own efficiency. However, the data in Figure 1 has shown that this is clearly the case and that the situation is worse in some sectors than others; surprisingly manufacturers have some of the lowest levels of automation. This issue is one of the top concerns of IT management, especially amongst smaller businesses (Figure 2). IT managers are clearly more frustrated about the poor use of skills than they are about training employees to have those skills in the first place. This is further underlined by the finding that IT managers estimate the between 40% and 50% of their employees qualifications and skills go unused on a daily basis (Figure 3). This misuse of expertise is a huge waste and is demotivating for the individuals involved. The worrying thing is that this wastage is just accepted. IT managers admitted that, in most cases, IT engineers and system administrators are carrying out work on a daily basis for which they are over-qualified (Figure 4). The wastage of skills and time is one thing, but all this leads on to another more insidious issue. Because IT staff time is being used inefficiently, IT departments as a whole are failing to innovate and provide the businesses they serve with the infrastructure and applications that are essential to keeping them competitive.

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The wastage of human capital in IT operations

Barriers to modernisation and innovation

The modernisation of IT infrastructure and the roll out of new applications to support the business are top priorities for IT managers. Of all the things that senior IT managers could achieve if they could find 50% more man hours, these two topped the list (Figure 5). The misuse of expertise is not because IT managers have no idea about the skills available to them, they clearly do. Regardless of size or sector 80% say their knowledge is complete, good or about right (Figure 6). So, if they know so much about the skills that they have, why are they not making good use of them? The problem is that, in many cases, they do not have the wherewithal and IT management tools to put in place the processes that make more efficient use of human capital. They need to be able to automate workflows, integrating humans with the best experience and availability as and when needed to deal with exceptions or make decisions. The individuals involved will often be internal operators; however experts from third parties with the specific skills to undertake a particular task can just as easily be called upon when requirements are better understood and workflow is well managed. This reduces the need to maintain specialist, but rarely needed, expertise inhouse and further frees up internal staff to focus on modernisation and innovation. When a problem is escalated to a human operator, the tools that do so should be capable of gathering all the data that is needed to complete the task and pass it to the operator. Better automation also means the training of new IT operators can also be focussed on the more complex tasks as soon as they are employed, rather than spending months graduating through working on more mundane stuff. Furthermore, existing experienced staff can distance themselves from newly automated functions that have previously distracted them. This all requires a transformation of internal management processes and an ethos of automation to be adopted. In addition, widely adopted IT management practices, such as ITIL, are designed to control human processes, not automated ones, so this needs adaption too. If these goals can be achieved then IT staff will also find their jobs more rewarding. Furthermore, automation and intelligent management should also mean overall escalations are dramatically reduced in the first place. With the capability to automate and manage work flow efficiently, an IT department is then set to industrialise its IT management and get its IT teams more focussed on modernisation and the delivery of innovative new applications.

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The wastage of human capital in IT operations

The industrialisation of IT management

Every IT department likes to think that the infrastructure it manages is different and has unique management challenges, but this is not true. An estimate from Fujitsu suggests that around 80% of IT infrastructure will be the 1 same whatever the business . This means there is huge scope for putting in place pre-programmed automated procedures for carrying out routine tasks that will be very similar in very different organisations. Automation ensures the error-free execution of mundane tasks, increasing the quality, consistency and availability of services delivered by IT operations. Automation can also dramatically lower the cost per unit of management; for example, patching thousands of physical servers or virtual machines with no human involvement this is true industrialisation. Many organisations do not realise the degree to which the automation of IT operations management is now possible and there remain too many events that are treated as exceptions when they are not. It is necessary to identify where such exceptions are really rules and automate these. Perhaps as many as 30% of tasks can be automated overnight rising to 50% over time. The tools that support automation can be programmed to be aware of context; for example taking into account time of day, time of week, specific loading pressure, underlying business processes etc. They can also learn, rather than having to be taught: in effect they are expert systems. The trick is to build automated processes that are intelligent enough to recognise true exceptions and when to hand off a task to a human operator with all the gathered data (Figure 7). If more than 50% of IT tasks can be automated, that still leaves approaching 50% that cannot be. It is making sure that these are the ones expensive engineers or external experts focus on that is important. The thresholds for handing off tasks need to be definable within the system. In the same way that virtualising a server means it can easily be incorporated into an aggregated cloud platform, automating an IT management process means it can easily be run time and time again. This is what is meant by the industrialisation of IT. Tools to support the automation and industrialisation of IT management are available. They can be installed onpremise but equally there are on-demand services that, in many cases, may be better for achieving the same goals as they are designed for controlled external access and make the sharing of data easy. If the infrastructure and IT management staff can be anywhere, then so can the management platform. What matters is that it supports the goal of making IT management more efficient and frees up the skilled staff for those all-important goals of modernisation and innovation.

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The wastage of human capital in IT operations

Conclusion
From the research presented in this report it is clear that IT managers understand the wastage of skills in their organisations and the impact this has on their ability to drive innovation. It is their job to drive efficiency into their operations: the board they ultimately report to have far less knowledge of the skills available in IT departments (Figure 8) and therefore the overall problem. The boards main interest is to see that the applications are delivered that are needed to support the business. It is Quocircas view that, regardless of the skill levels of individual IT operators, just throwing more and more of them at the growing problem of managing complexity will never be enough. Only the introduction of more automation can lead to more intelligent and efficient use of human capital, however it is sourced. There are three options for achieving this: Capital investment in new tools installed onpremise. Freeing budget from operational spending to subscribe to on-demand services. A hybrid approach with the flexibility to deliver both of the above. With more and more IT infrastructure being deployed in remote data centres or sourced from public cloud service providers and the option of sourcing both low and high skilled operators from third parties, there is little intrinsic benefit to purely on-premise tools. There is much to be said for using a software-as-a-service (SaaS) based approach; such on-demand services are designed for remote access and sharing. IT managers have two basic choices: Ask their boards for new money to achieve automation, which requires making a solid case based on the longer term savings that can be achieved. Achieve the investment required within existing budgets simply by recognising where short term cost savings can be made and re-allocating spending within the budgetary cycle. The second of these is especially true if the new tools required are paid for out of operational expenditure. Either way, only by improving the speed of delivery of IT innovation and new applications will IT operations teams cease to be seen as a drag on progress and, instead, are recognised as fundamental supporters of the businesses they serve and fundamental to increasing its competiveness.

Research demographics and references

The research presented in this report was based on 100 interviews with senior IT managers in UK enterprises split across four industries: financial services, manufacturing, RDS (retail, distribution and transport) and other commercial. All the business interviews had 1,000 employees or more. 1 Fujitsu on the industrialisation and standardisation of IT http://www.fujitsu.com/uk/different/triole/

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About IPsoft
IPsoft is a global managed services provider of autonomic-based services. The companys mission is to power the world through expert systems, and to that end IPsoft leverages self-learning, self-healing cognitive systems across IT Operations, Cloud Orchestration, Fraud Prevention (FAS) and Business Process Automation. The unique autonomic proposition effectively manages operations while reducing human error and providing enhanced service levels. Headquartered in New York City, IPsoft has operations in ten countries across North America, Europe and Asia Pacific supporting enterprise customers, service providers and telecommunications companies.

About Quocirca
Quocirca is a primary research and analysis company specialising in the business impact of information technology and communications (ITC). With world-wide, native language reach, Quocirca provides in-depth insights into the views of buyers and influencers in large, mid-sized and small organisations. Its analyst team is made up of real-world practitioners with first-hand experience of ITC delivery who continuously research and track the industry and its real usage in the markets. Quocirca works with global and local providers of ITC products and services to help them deliver on the promise that ITC holds for business. Quocircas clients include Oracle, Microsoft, IBM, O2, T-Mobile, HP, Xerox, EMC, Symantec and Cisco, along with other large and medium-sized vendors, service providers and more specialist firms. REPORT NOTE: This report has been written independently by Quocirca Ltd to provide an overview of the issues facing organisations when it comes to the management of IT infrastructure.

The report draws on Quocircas extensive knowledge of the technology and business Details of Quocircas work and the services it offers can be found at arenas, and provides http://www.quocirca.com advice on the approach that organisations should Disclaimer: take to create a more This report has been written independently by Quocirca Ltd. During the effective and efficient preparation of this report, Quocirca has used a number of sources for the environment for future information and views provided. Although Quocirca has attempted wherever possible to validate the information growth. received from each vendor, Quocirca cannot be held responsible for any errors in information received in this manner. Although Quocirca has taken what steps it can to ensure that the information provided in this report is true and reflects real market conditions, Quocirca cannot take any responsibility for the ultimate reliability of the details presented. Therefore, Quocirca expressly disclaims all warranties and claims as to the validity of the data presented here, including any and all consequential losses incurred by any organisation or individual taking any action based on such data and advice. All brand and product names are recognised and acknowledged as trademarks or service marks of their respective holders.