How Lauth is growing IT with downsizing in mind

Consolidating servers and apps is key to keeping IT running with a small staff

Jeff Ton has survived the booms and busts of the IT industry during his 28-year career as a programmer, consultant and manager. A year ago, Ton left ailing Thomson Consumer Electronics for a chance to lead the IT department at Lauth Property Group, a fast-growing Indianapolis commercial real estate developer that doubled its revenue last year to $592 million. The company has 22 permanent locations, plus dozens of temporary sites, that are networked via everything from DSL to satellite technologies. (Read his biography.) Ton spoke with Senior Editor Carolyn Duffy Marsan about how he is building Lauth’s IT staff and infrastructure while preparing for the inevitable downturn. Here are excerpts from their conversation:

How fast is Lauth growing?

Two years ago, Lauth was a $200 million company. Last year, it was nearly $600 million. The partners have laid out a plan to get to $1 billion by 2010. We did an employee survey, and out of 400 employees, 325 had been with the company for less than three years. So it’s a huge shift in culture to bring in that many new people in such a short period of time.

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Jeff Ton has survived the booms and busts of the IT industry during his 28-year career as a programmer, consultant and manager. A year ago, Ton left ailing Thomson Consumer Electronics for a chance to lead the IT department at Lauth Property Group, a fast-growing Indianapolis commercial real estate developer that doubled its revenue last year to $592 million. The company has 22 permanent locations, plus dozens of temporary sites, that are networked via everything from DSL to satellite technologies. (Read his biography.) Ton spoke with Senior Editor Carolyn Duffy Marsan about how he is building Lauth’s IT staff and infrastructure while preparing for the inevitable downturn. Here are excerpts from their conversation:

How fast is Lauth growing?

Two years ago, Lauth was a $200 million company. Last year, it was nearly $600 million. The partners have laid out a plan to get to $1 billion by 2010. We did an employee survey, and out of 400 employees, 325 had been with the company for less than three years. So it’s a huge shift in culture to bring in that many new people in such a short period of time.

How does the company’s growth affect the IT department?

When I first arrived, there were 225 desktops. We are closing in on 450 desktops. We have around 40 servers that are in our data center at Intech Park. What we’ve done on the server side is to look to consolidation. It’s the whole idea of growth with downsizing in mind. If we bring in a new application, we don’t automatically bring in a new server. We try to consolidate, use virtual servers, that sort of thing.

Negotiating volume discounts and better service levels is getting easier. Now we are big enough to carry some weight with our vendors, and we have the Lauth name that is becoming nationwide. We signed an enterprise agreement with Microsoft that’s providing a lot of benefit to us as we continue to grow.

What are your staffing plans for IT?

At the time I joined, we had 15. Now we have 20. We’ve got some other positions that we plan on filling in 2007, which would take us to a total of 23 or 24. I don’t believe we will grow much beyond that. What we are trying to do is to put controls in place so we’re not growing linearly with the company. We’re putting technology in place so we can support more with fewer people. I went through five years of downsizing at Thomson, so I’m trying to bring those lessons learned to a growing company. We are growing with downsizing in mind.

What are the top challenges you face in managing the company’s growth?

One is the speed at which we need to react. We’re trying to be more proactive as we go forward. We spend a lot of time managing new associates when they come on and providing the training that’s associated with the technology. Another part of managing growth is continually looking at our application portfolio. We have outgrown some of our packages, and we need to look for products that are a little more robust. We’re also trying to rationalize our software portfolio as we’ve grown. With the influx of new associates that we’ve had in the past few years, everybody comes in with their favorite package that they want to use.

If someone wanted to copy your idea and grow with downsizing in mind, what would you suggest?

This philosophy has to do with how you grow both human resources and technology resources. When you’re looking at human resources, you’ve got to leverage external resources wherever you can, such as contractors and consultants. You have to decide what knowledge and skill you want to own vs. what knowledge and skill you want to get from the outside. You want to introduce technology that not only supports the departments but supports the IT staff as well, so they are able to support more with fewer people. You need to standardize on your desktop and laptop equipment and your cell phones. It’s easier to support a standard desktop. It’s about server consolidation and software portfolio rationalization. You need to educate [people] about why you don’t want five different software packages that do mapping analytics. It’s not the cost of the software; it’s the support on the back end that adds up. It’s about getting the message early that the business isn’t always going to grow at the pace that it’s growing today. When it plateaus, the pressure on overhead costs is going to increase. You don’t want to stick your head in the sand and pretend that’s not coming because it is.

Describe your IT strategic planning process.

We ran the strategic planning process for four months last year. Our goal was to not only catch up to the growth that Lauth is going through but to get in front of it. We looked at what’s going to be needed five years down the road. We were wrestling with how to describe what we were trying to convey to the [management team], which doesn’t know servers and networks and doesn’t care to know them. We got the idea that building an IT infrastructure was much like building a building, so we put that theme into our process. We had an introduction to our strategic plan that was a set of blueprints. One of the documents that Lauth uses to make its investment decisions is called a final investment memo. Our whole strategic plan was put into the format of a final investment memo. We had our strategic plan divided into phases like site work, foundation, core, tenant improvement and future expansion — those types of things that are typical in real estate development. We used the same terminology that the guys who are making the decisions to fund this strategic plan were used to hearing. It was very well received by the Executive Forum. We went through in pretty minute detail what we were trying to do and why we were trying to do it. It was approved in September.