IT Department Activities: A Taxomony

I’ve recently struggled to explain why certain choices are made among different projects and investments.  As a portfolio manager, a large part of my job is not just ensuring we do the right projects, but ensuring we don’t waste scarce resources on the wrong projects.  After a bit of noodling on scrap paper, I ended up with the diagram below.

Block diagram of the five types of IT activities

A Taxonomy

The five boxes represent broad classes of activities that the average IT department will conduct.  They include:

Operations, the routine delivery of IT services, including services such as user support, backups, scheduled jobs, and corrective maintenance, i.e. problem resolution. Operations activities are required, in order for the organization to function.

Maintenance, the regularly scheduled application of software patches, deleting old logs, database purges, and replacement of equipment at the end of its service life.  Maintenance activities can be deferred, but deferral only shifts costs in time, and may reduce overall system availability, due to increased numbers of problems reported during operations.

Compliance, the activities undertaken to ensure operations and maintenance actions comply with legal and contractual requirements, such as PCI, data security, payroll tax withholding, and so on.  Like Operations, Compliance activities are required in order to meet external requirements and obligations.

Growth, the activities that will increase business, or position the organization to handle increased business, such as marketing, websites, capacity upgrades, and so on.  Growth activities are elective, and typically selected based on their ability to increase revenues.

Transformation, the activities that will change the way the organization does business, such as new automation, replacing antiquated systems, standardizing on a single system, and so on.  Transformation activities are also elective, and typically selected on their ability to increase profits.

Notice the distinction between increasing revenues and increasing profits – some projects may do both, but generally the focus is one one or the other. Because both Growth and Transformation activities are elective, and typically limited in duration, they are usually managed as projects.  The three required activities are on-going, so the IT Department will typically be organized into specialized groups, with dedicated staff and a line manager who is responsible for that technical area.

Also notice that risk and reward increase as you move up the stack of boxes.  The required activities are typically managed as services, with standard procedures and service levels.  But the elective activities, although they will eventually result in additions or changes to the required activities, are less predictable – they drive change, and are subject to a number of influences.  Thus, the elective activities tend to be controlled by project managers, and the required activities tend to be controlled by line managers.

None of this is news to those who work in an IT Department; however, it may be less than obvious to our customers.  When talking about why a project was rejected, deferred or canceled, it can be useful to frame the conversation in terms of what else is going on in the organization at the time.  Especially in a down economy, when budgets are tight, it can help to show the impact of Yet Another Project on an IT staff already spread thin, dealing with a mix of required and elective activities.   It can also help explain why a project selected for its top-line impact can be less risky than a rejected transformation project with an ROI driven by improvements in the bottom line.

It’s hard to tell a customer that you won’t be able to deliver their new system this year, but helping them understand the overall picture will frequently make the difference in how they react.

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About Dave Gordon

Dave Gordon is a project manager with over twenty five years of experience in implementing human capital management and payroll systems, including SaaS solutions like Workday and premises-based ERP solutions like PeopleSoft and ADP Enterprise. He has an MS in IT with a concentration in project management, and a BS in Business. In addition to his articles and blog posts, he curates a weekly roundup of articles on project management, and he has authored or contributed to several books on project management.