The Power of IT Peer Groups

Posted 03-27-2013

The Power of IT Peer Groups

By Karen A. Frenkel

Last year, Israel Lang, CIO of Pinnacle, an IT consulting practice in Indianapolis, faced a dilemma. A difficult customer was mistreating his engineers and four of them had quit in frustration. But the customer paid Pinnacle five figures a month for its services, “so it was hard to walk away from that cash flow,” says Lang.

Rather than lose the customer, Lang turned to his peers, a group of about 25 people from six medium-size IT companies who had been meeting since 2011. The group, one of 25 run by HTG Peer Groups, Harlan, Iowa, and which convenes for two days each quarter, brainstormed and suggested three options: 1) Fire the customer; 2) Hire a new team of engineers who knew from the start they would be working for the onerous customer; 3) Circumvent the customer contact, talk to the board and offer to take over the customer’s entire IT environment.

Lang is one of hundreds of CIOs at medium-sized firms who find that face-to-face peer groups provide advice and support; demand accountability, as would a large company’s board; and lead to enriching, personal business relationships. In terms of accountability, the peer groups help members establish and attain their goals. Typical goals are to hire several engineers, train a new salesperson by the next quarter, or find the best way to bill a client for an engineer’s time. Outcomes must be measureable.

Ultimately, Lang chose a hybrid strategy. After introducing new engineers, whom the client vetoed, he met separately with a higher-level manager. The manager admitted that other vendors had also voiced concerns and asked Lang to document incidents. Then the manager brought the issue to the board, and interactions improved. Everyone “is better for it,” says Lang, “and my engineers responded well because they felt I went to bat for them in a difficult situation.”

The peer group’s suggestions provided not only a starting point for a solution, but “validated what we were thinking and feeling,” says Lang. The peers acted like a virtual board, providing “feedback and offering ways to avoid stumbling blocks,” he says.

Steve Knutson, CIO of Marco, Inc., a 620-employee IT consultancy in St. Cloud, Minn., and who belongs to the same peer group as Lang, says accountability initially brought the best value, but that belonging to the group also eases a sense of isolation. “There’s no manual on how to run and grow an IT business,” he says. “I can’t turn to page 40 on how to pay billable engineers, or on how to grow my managed service provider practice.”

A gathering with colleagues in the same business is “like drinking through a fire hose,” Knutsen says. Every quarter, each member picks three goals and must report back the following quarter. Depending on whether or not the goals are achieved, the member places a green or red dot next to each goal on their PowerPoint presentation.

Such accountability provides “an extra kick,” Knutson says. “You don’t want to be the guy with three red dots standing in front of other companies. It’s embarrassing.” Meetings can get “pretty tense,” he says. “They go, ‘Why didn’t you do it?’ ‘Cause I was busy with other stuff.’ ‘Well, why’d you make it a goal?’ So you learn real quick you better make a goal you can stick to and do.”

The Power of IT Peer Groups

Members must also reciprocate with each other. Lang introduced the group to his “Three Percent Fund.” If an employee’s annual salary is $50,000, for example, Lang allocates another $1,500 to their compensation for support of their pet causes. If their child’s sports team needs sponsors, or if they are raising money for cancer awareness, Pinnacle gives a gift toward it. Many peer group members have adopted the fund idea, he says.

Until this year, members have acted as group facilitators, but HTG is phasing in professional facilitators. It is also introducing online groups, which it has facilitated in the past, for companies that cannot afford the cost of attending face-to-face groups.

Face-to-face group members must attend the quarterly meetings and can bring up to four employees. On the second day, the members split off into smaller groups for their specialties. Companies must have at least eight full-time employees, and earn annual revenues of more than $750,000. Annual dues range from $2,500 to $3,000.

Although neither Knutson nor Lang can quantify the ROI for their group, both say an invaluable benefit is IT peers who have become friends. “I call them if I have a problem,” says Knutson. “They’ll share how they solved it. They’re my friends.”

Members also often feel comfortable enough to declare personal goals, like getting away for a long weekend with their spouse or losing weight. “We interact through Facebook and Twitter and know what’s going on in one another’s lives,” says Lang. “I asked one to give his kid a High Five from me for his soccer team.”

Lastly, Lang urges peer group members to be transparent during meetings. “Don’t puff out your chest,” he says, “and act like you’re doing everything right and don’t need help. Say where you need help.”

About the Author

Based in New York City, Karen A. Frenkel writes about business, entrepreneurs, innovation, computer science and technology, and has been published by Bloomberg.com, Bloomberg Businessweek, FastCompany.com and Science