Brave new world: The challenges in transforming information technology services

Background

It was a traditional university environment with 4943 full-time equivalent staff members (FTEs), 20,000 Personal Computers (PCs) in operation, and 33,468 students. Hierarchical in structure and siloed through subject specialisation, the University of Auckland is recognised for its excellence in research and widely respected for its independent thinking. ¹

The evolution of IT services had over the years assumed a federated format: technology support had been introduced on a ‘needs and service basis’, which was predominantly faculty and end-user centric. The Faculty of Arts, for example, required a unique set of design criteria, systems, and support services from those that were followed in the Faculty of Engineering. Thus, each faculty had a unique range of IT needs and it made sense, therefore, to have dedicated IT support in areas where resources could effectively solve user problems (on site), maximise uptime, and expedite academic and faculty performance that would generate value for the University.

Whiteside provided some historical context,

We have managed the university from the centre . . . and the opportunity to perform end-to-end process and practice only came about when we standardised the professional roles during the FAR project in 2014. ² Prior to that, the faculties had their own structures, job descriptions and roles. ³

The standardisation of IT support roles and retention of local reporting lines within faculties was a decision that ensured consistency of process and practice across the organisation, while safeguarding the continuity of service within the established local user-support model. There was, however, a groundswell for far-reaching change that stemmed from internal and external pressures. These forces were closely associated with the workings of Information Technology in practice, and developments that were emerging in the market. Student numbers had dropped in 2014 and 2015 respectively, which prompted a more introspective view of ‘how we could improve’. Other forces reflected the evolution of internal support services that were unique to the needs of the University, and some were peculiar to faculties.

By the end of 2014, 11 separate IT support teams served eight independent faculties and their respective system and service requirements. There were areas of overlap and duplication of services (as some systems and products were common to all users across the University, while many remained localised). As a result, there were too many hand-offs and service delays, which contributed to additional costs and culminated in higher levels of user frustration and dissatisfaction with service quality (see Exhibit 1). Moreover, a reliance on faculty-embedded expertise had encouraged personal service relationships to develop between users and individual providers (some spanning more than 30 years). Therefore, dedicated faculty services (delivered by IT team members from within departments) had engendered a comfortable co-dependence that was based on deep technical (in-house) capability and skills – that from a university-wide perspective – were costly and increasingly inefficient.

OPEN IN VIEWER

Exhibit 1.

2014 University IT service quality benchmark staff report.

In addition, there was a general awareness that the University was perhaps ‘lagging the rest of the IT world’, and subsequently several ‘burning platforms’ had started to smoulder in the minds of the leadership team. Although significant inroads had been made in standardisation of systems and centralisation of services, there was a growing sense of the urgent need to transform. The federated structure and silo mentality had served the traditional IT model, but the appropriateness of these structures for institution-wide digital transformation and leveraging group-wide productivity benefits was in doubt. The level of integration needed for intelligent business process improvement, and the introduction of dynamic, real-time, scalable architectures as well as multi-skilled based professional services would require a different operating model, and perhaps, structural overhaul.

Over the years, Whiteside and his team had formed a considerable understanding of what needed to be addressed. For example, ITS was overly hierarchical; support staff had consolidated their focus and efforts too narrowly on user needs (rather than broader IT services and professional skills); routine transactions were completed over the phone or by hand (many of the service requests were email, fax and paper-based); and strategic enablers such as eResearch, the Cloud and analytics were underinvested. Economies of scale in Applications Support Teams had slipped and there was a perception that FTE cost of service delivery was too high, while overall end-user satisfaction levels were declining (compared with industry benchmarks and university expectations). The unit had largely avoided the rigours of sweeping organisational rationalisation (Faculty Administration Restructure), while notably, insufficient attention had been given to leveraging a growing list of strategic enablers. Whiteside turned these priorities over in his mind: communities of practice, agile or continuous delivery, service ownership, automation, digital experience, application support and design, product and systems standardisation, service integration and centralisation, and solution architecture were in need of review or indeed, adoption and implementation.

Benchmarking

A decision to investigate and benchmark ITS processes and practices followed the release of the Voice Project ⁴ results at the end of 2014. The University of Auckland occupied the unenviable position of being ranked last (number 26 of 26) that year, a position Whiteside was determined to change. If anything, it made a decision to rally internally much clearer.

Additional external benchmarks and internal university data were needed. The team wanted to understand the extent of the challenges they faced, the exact issues that would need to be addressed and how these stacked-up against similar institutions in the region. The evidence would provide valuable input to a transformation plan that would likely unfold over years. The University had in the past utilised various benchmark organisations and in 2015, they identified Library Services, IT, Property and Finance as four functions that ‘were over’ the UniForum Cubane service review benchmarks (drawn from 30 universities across Australasia). Whiteside explained the decision making,

In 2016, PricewaterhouseCoopers (PwC) were invited to review evidence collected from The Hackett Group findings, Gartner analysis, UniForum figures – including some of their own – as well as conduct interviews with key customers within the University. Their mandate included recommendations on the anticipated size and scope of the function in the future. ⁵

The benchmarking analysis provided a clear and accurate view of the status quo. It also offered fairly sobering confirmation of prevailing assumptions about problem resolution and customer satisfaction, overall IT spending, staffing mix, process costing (design-build-run-manage), technology platforms and how these factors compared with similar (peer institutions) and international best practice (see Exhibit 2). While the University was slightly more expensive than other institutions, it was not spending significantly more on IT services than other universities. However, there were clear indications of underinvestment in innovation and transformation, and overinvestment in maintenance and operational support. The Hackett Group, for example, highlighted service and capability gaps in critical areas such as service placement, skills and talent, process design, enabling technology, and governance and organisation. ⁶ Internal processes were seen to be cumbersome and in some areas antiquated. The faculty-based teams had become inflexible and limited in their ability to provide broader University-wide professional services. There was also a prevailing institutional culture of self-sufficiency. ITS assumed a position that ‘We do it all’. While this did not preclude external support and outsourcing as options, the University remained inward-facing and subscribed to the New Zealand way of doing business: solutions were sought through consultation and by way of reaching consensus. It was anticipated that lengthy consultation would have to take place before any changes could be tabled.

OPEN IN VIEWER

Exhibit 2.

The Hackett Group, comparative IT value generation.

Justin Richardson, Deputy Chief Technology Officer (CTO), confirmed,

. . . one of the guiding principles was standardisation, to free up time and resources . . . we were heavily invested in transactional operations . . . building PCs, delivering applications, dealing with tickets . . . We were underinvested in the bespoke capability and we needed to free up resources from the transactional services to address this need. ⁷

Independent evidence confirmed the extent of customer dissatisfaction among users (see Exhibit 3). The Director of Digital Strategy & Architecture, John Pye, explained, ‘ . . . we didn’t know how to get the efficiencies with the federal structure . . . and we weren’t in a position to tell the Deans what to do . . . we had to convince them’. ⁸ One of the challenges was to ensure a smooth transition that did not impact the students or users, while being mindful of investing in technology, maintaining data centres, and increasing storage and network capacity.

OPEN IN VIEWER

Exhibit 3.

The voice project: University IT service quality benchmark survey™ staff sector, bad experience, 13 December 2016.

Benchmarking offered new insights and confirmed the institution’s standing in relation to competitors in the market. It also provided impetus to address escalating costs across the University, which had begun to exceed revenue growth. A fact confirmed by New Zealand’s universities having among the lowest levels of income per student in the developed world. The University faced two potential options, (1) increase class sizes (i.e. student: staff ratios) and risk reducing the quality of teaching and lowering the University’s international rankings or (2) reduce costs of overhead and administrative services. ⁹ It was a relatively easy decision to make as reputation, teaching quality, and international rankings were too important to risk.

Challenges

Transformation had been underway to reorganise the ITS structure before the functional review began. It aimed to position IT as ‘future ready’ and to move away from the hierarchical legacy to a more flexible approach and Agile format. The IT functional review helped shape the resources, prepare the organisation for ‘the journey’ and galvanise the intention to create a better foundation for digital transformation across the University. It aimed to fulfil the needs of new efficiencies, and improve service delivery and effectiveness. New skills had to be acquired, resources realigned and ‘the culture’ addressed in the process too. These decisions did not exclude the possibility of rationalising resources and headcount reduction.

The challenges were complex and enmeshed in resources and technical capabilities, cost structures, service quality, growth imperatives and emerging technology. The transition to University-wide Agile practices (including provision for additional specialists across 18 teams) was a process that had to be implemented with minimal disruption to existing services. Certain localised functions and dedicated resources, therefore, needed to remain intact. For example, IT leadership, decision making and oversight were best served locally in the faculty-embedded format. In addition to new skills, a rejuvenated customer centric approach and greater staff autonomy were essential to provide an end-to-end service. However, economies of scale across the function were out of sync with comparable IT functions and international trends. The ratio of fixed term to permanent staff was comparatively high and so too the number of staff engaging standardised repetitive transactions. Subsequently, high volume transactions prevailed over much-needed IT support in learning and teaching and research; restricting the scope of problem resolution, prolonging turnaround times and increasing service costs. Changes in capability would prove time consuming and expensive. Yet, strategic imperatives included cost containment and specifically, lowering operating costs. New reporting lines within disciplines would be unavoidable. Teams would be disrupted and service levels negatively impacted in the process, at least in the short term. Staff mobility across the University would need to improve; coupled with clearer career paths and more attractive job options, especially for individuals who acquired digital capabilities to better position themselves for promotion. Measuring and reporting on services required attention and establishing new structures to support the implementation of the University’s Digital Strategy and Cloud Strategy were paramount.

It was clear the intended IT structure and revised performance criteria differed substantially from the status quo, and the challenges associated with the transition presented a number of potential risks, strategic opportunities and operational alternatives. Perhaps, the most obvious risk was associated with the decision to either embark on incremental change or adopt a ‘big bang’ approach. Either way, new capabilities were going to be required before embarking on change, and the implementation would need to be carefully facilitated, and wherever possible, optimised, for example, what steps could be coordinated in parallel, if any. Moreover, management had to explore the pros and cons of external options. For example, internal priorities and solutions as compared with the risks and benefits associated with outsourcing. Which functions or services (if any) could feasibly be outsourced without compromising service quality, IP and cost management – particularly in the long-run. How would costs be contained when so many initiatives remained resource intensive (e.g. training and upskilling) and others relied on capital acquisitions (e.g. new technology and upgrades). Possibly, the biggest risks were associated with (1) a traditional, well-established culture expected to assimilate new performance standards and ways of operating (when silos had to be dismantled, roles reconfigured and staff upskilled) and, (2) overcoming the distrust stakeholders might harbour towards a shared resource model, when their faith lay less at the centre and closer to home (more accustomed to dedicated and trusted faculty-based services). Successfully garnering stakeholder buy-in and support presupposed faculty and departmental consensus on design configuration, service offerings and delivery mechanisms (formats and new solutions), which would invariably meet with varying degrees of resistance from a number of different quarters. Whiteside confirmed,

. . . the most controversial part of the model; the hardest part of the model for faculties to understand . . . they had to share resources and . . . we had to move away from single points of failure . . . move their developers from being individuals who did what they thought was best into a professional practice. ¹⁰

Consultation

There were two potential levels of change: (1) consultation with the Deans and structural recommendations and (2) the functional review process (FAR) and activities performed by the consultants (in the main UniForum Cubane, The Hackett Group and PwC), which would culminate in the consolidation of support services and adoption of Agile methodologies. ¹¹ A review of high level findings from PwC began in September 2016. The consolidation of services, following the functional review was proposed alongside the principles of a new service model that was discussed and debated with the Deans. As Whiteside recalled,

This was a lengthy process and it took most of 2017 . . . it was quite rare for an institution to embark on such a high degree of change . . . to have gone to the Agile model and DevOPs to the extent that we did . . . especially when we have 18 Agile teams, with three dedicated to the Agile delivery of local applications in faculties.

The process was challenging and not all the stakeholders involved agreed to the proposals.

Matt Poole, Project Manager, explained that there were starting rounds with the Deans that ran for a couple of months. But there were no agreed outcomes:

The Deans were being asked to take a leap of faith – invested in their respective faculty, students and staff – they had been told several times before that IT was going to improve, but they were asking ‘what will be different this time?’ ¹²

There was a second round of consultations that followed, ¹³ where some of the concepts were demystified. For example, ‘agile’ was a buzzword and not particularly customer centric. Stakeholders understood that problem resolution quality and turnaround times were below par, and that infrastructure and services with embedded customer expectations (vertical integration), and dedicated resources within faculties (silo mentality and federated services) would need to change. In the process, restructuring of roles and moving from dedicated IT support to a shared resource model (facilitation and integrative consultancy) were discussed (see Exhibit 4). During extended negotiations, these services and associated costs were reviewed, including how they were going to be organised differently, and more efficiently. More conversations followed and months of consultation led to detailed analysis, which helped the leadership groups build trust and mutual understanding, and in the end, a common language was achieved.

OPEN IN VIEWER

Exhibit 4.

Overview of review findings and direction, FTE savings, IT CoP meeting, 26 October 2017.

Design followed, which in many ways was the key to being ‘future ready’. One option was to pursue an ‘open approach’ with ‘roadshows’ where the staff could share and debate information. There would be clear indications of the designs under review, and staff would be encouraged to provide informal feedback before the formal consultations began. PwC had provided the high-level opportunities, principles of change and strategic capabilities (potential areas to invest in – see Exhibit 5), which could be used to guide the proposed solutions during design validation. At the same time, new services that were geared to improving customer experience required building solutions differently and improving staff engagement, enhancing skills development and enabling the ‘mobility of staff’. The aim of providing integrated consumer-grade experiences for all users across the University was critical, and design was central to a new organisational model: a flatter, more flexible structure with end-to-end accountability across service lines.

OPEN IN VIEWER

Exhibit 5.

IT function review – summary of PwC findings and opportunities: principles of change and strategic capabilities.

The design process needed to consider service improvements in those areas where gaps had been identified. For example, reducing the cost of the model, improving audio-visual (AV) support for the IT engineers and in the provision of more clinics. In addition, design could help negate the need to undertake a large functional review in the future and assist in the absorption of commercial driven or financial benchmarking requirements. Detailed design discussions took place with the Information Systems (IS) managers from each of the various areas, as well as several rounds of consultations with the Director of Faculty Operations, the Deans, and Service Division Directors and Associate Directors (three times), where updated statements and designs were positioned, and feedback was collected.

The design phase, as Jason Mangan, CTO, explained,

. . . effectively ran from 19 February 2018 to the third interview with our Deans, and the release of the consultation document to staff on 27 July 2018. It wasn’t until this point that we had an accurate view and had collected various feedback to help shape what the solution should look like in terms of the organisation position. ¹⁴

A number of structures were proposed with improved stakeholder experience in mind, including the strategic options of ‘continuing on the current path’, eliminating inefficiencies and investing in strategic capabilities (see Exhibit 6). A large central team (centralised ITS support) and faculty-based FTEs remained in-scope as potential structures (see Exhibit 7).

OPEN IN VIEWER

Exhibit 6.

IT function review – summary of PwC findings and opportunities: strategic options.

OPEN IN VIEWER

Exhibit 7.

Overview of review findings and direction, current distribution of technology resources, IT CoP meeting, 26 October 2017.

The formal consultation process was concluded on 3 October 2018. Whiteside reflected on his initial thoughts from 2014, when the strategy was still undecided and the plan, uncertain. Now, more than 4 years later, despite several delays and many difficult conversations, the organisation and ITS team had made considerable progress ¹⁵ (see Exhibit 8). All that remained was implementation as the final steps in transformation. He paused to reconsider the original IT strategies and the value they held, and for a moment, he weighed up the options again: (1) do nothing at all, or (2) embark on incremental change or a ‘big bang’ approach, or (3) transform and outsource. He wondered if any of the alternatives would have delivered similar or better value.

OPEN IN VIEWER

Exhibit 8.

The voice project: University IT service quality benchmark survey™ staff Sector, benchmark results ranking table, 7 December 2018.