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. 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:

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.

Getting personal :Jeffrey Ton
Organization:Lauth Property Group
Title:Vice President of Enterprise Processes, Information & Technology.
Responsibilities:Oversees a unit that used to be three, and includes project management, desktop and server support, and IT infrastructure.
Tenure:Since March 2006
Previous jobs:Held various posts with consumer electronics giant Thomson including director of enterprise services centers and applications manager. Previously worked as a software and computer consultant and programmer.
Annual IT budget:$5 million
IT staff:20
Last good management or IT book read:The Oz Principal by Craig Hickman. It's about improving team accountability.
First experience with the Internet:"I was a mainframe dinosaur. The first time I used the Internet was in the mid-1990s. I was at home doing research."
IT set-up at home:A standard desktop with a broadband cable connection and wireless.

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.

How much money did you ask for in the IT strategic plan?

We didn’t ask for a particular dollar amount. The plan says that if we are going to get from Point A to Point B, we are going to have to increase IT funding forever. We asked for an increase in the IT budget as a percentage of revenues. The industry norm is about 2.1%. We were at 0.8%. The plan moves us from 0.8% to 1.5%. We didn’t ask for 2.1% because we think that if we do this whole thing with downsizing in mind, we can achieve the same value from IT at 1.5% that other companies do at 2.1%.

How does innovation fit into your IT strategy?

When you look at Gartner’s continuum of IT value, you start at the very left side with utility and you go all the way to the right side with profit generator. We’re trying through our strategic plan to move from left to right. We are looking at how a traditional IT department can add value to the product side of the house, which is building buildings. We can help Lauth build buildings to support [emerging technology.] Smart buildings, green buildings. I’m trying to figure out where they fit in Lauth’s business model and whether there are problems that our department can be solving. Obviously, if you want to build wireless into a building, you want to make sure that the materials you are using don’t prohibit the wireless signals. Those are the types of things where our expertise could be beneficial.

You don’t like to talk about business/IT alignment. Why?

We don’t build IT systems. We build buildings. When we presented the IT strategic plan to the IT department, we handed everyone a hard hat. This was something I wanted to drive home to our team. We’re trying to take the whole business alignment concept out of our everyday thinking and out of our terminology. We try very hard not to refer to "the business.’’ We are the business. We refer to the other departments, but we try not to create a situation where it’s the business versus IT. The business departments are hungry for us to provide new ideas from a technology prospective. I really believe that from an IT guy’s perspective, this is a once-in-a-lifetime opportunity. You’ve got a business that is growing. You have a business that embraces technology and understands the value that IT can bring.

What are your goals for 2007?

We have four main goals: Analyze and rationalize our software portfolio; move the IT department towards the right side of Gartner’s continuum; create a culture of continuous process improvement through software and training; solidify our network infrastructure to keep up with growth.

What does your network look like?

We have eight primary locations on our network — Indianapolis, Charlotte, Dallas, Denver, Detroit, Orlando, Phoenix and Pittsburgh — and 14 other permanent locations. But in this industry, every job site is a site on the network. We could have anywhere from 30 to 40 jobs going on at any particular time nationwide. These sites are temporary; they might be on the network anywhere from three months to a year and a half. That presents some unique challenges because lots of times when you are building you are out of the reach of some technologies like DSL and broadband. In some cases, we’ve resorted to putting satellite dishes on the job trailers so we can get connectivity back to the office. We use Time Warner as our carrier, and we manage the network ourselves. We’ve been talking with some of the cellular carriers about how we could drop a cellular receiver into a job trailer, and it would on our network.

How do you handle mobility?

 Mobility is getting to be more of a challenge. At least 50% of our people have BlackBerries. We support well over 200 devices. It’s a company-provided device, and we pay for the phone service. We are working right now to pull all our cellular service together with one carrier. We’re about 50/50 on desktops and laptops. That has evolved quite a bit. When I started a year ago, we were 30% laptops and 70% desktops. As the company has grown, remote access and mobility have become more important. Today, our remote access/telecommuting support has been limited to a few individuals. In February, we are kicking off remote access to the associates. We’ve set up some guidelines: a certain percent of your time has to be spent traveling and you have to be a certain level within the company. We’re working with the Indiana University Kelley School of Business. One of the things they are looking at for us is our mobility/security policy.

What are your security risks?

A disgruntled employee is a bigger risk than someone trying to hack in from outside. We do take security seriously on our networks. We’ve had stolen or lost laptops and BlackBerries. We are encrypting our laptops, and we have a remote kill option on our BlackBerries so if they get lost we can disable them. We’re looking into an SSL VPN.

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