Thursday, 2 February 2012

The time for organisational change in IT Departments?

This is really a thought paper on the structure of IT departments going forward. It poses more questions than answers but I do feel that change is needed and as always thoughts precede action!

Generally we seem to be stuck in a time warp with how we structure IT departments. We sometimes see discussion on how we should be aligning to the business and how IT services should change; we sometimes get companies partially going down those routes by placing IT people in the business and creating new roles but more than not, we seem to drift back into the traditional structure.

When I say traditional structure, I am talking about an IT department headed by a CIO/IT Director and divided into functional teams headed by a manager.

Although I have nearly always operated the traditional model I have over the years become more uncomfortable with it because it somehow doesn’t seem to match the business needs and although I have made some adjustments, it still seems to drift back to the traditional model and become top heavy and expensive. So is there an answer?

If we attempt change but eventually seem to end up with a very similar solution to where we came from does this suggests the traditional model is OK or do we need more fundamental change.

One question is why do we go back to what I am calling the traditional model? Is it because:-

  • It is what IT people know best and therefore it feels comfortable
  • It retains the barrier with the business where people don’t feel comfortable outside the technology world
  • It creates the hierarchy where people can aspire to become team leaders and managers regardless of business need
  • Structures are often built to resolve people issues rather than the business need

The other question is why would we want fundamental change? Here are some thoughts:-

  • The costs of running IT are still too high
  • The hierarchical model can stifle or block innovation and sometimes motivation
  • The speed of response to business change is slow
  • Business alignment and understanding is poor
  • IT Direction versus Business needs don’t always match
  • Business managers are now more IT literate than ever before

What would a fundamental change look like and what sort of questions should we ask ourselves in order to define it?

  • Do we need a CIO/IT Director and if not how do we co-ordinate direction? Could the IT Director be part time or supplied as part of a service?
  • Would it be better to have a Chief Process Officer or Business Transformation Director on the board and aligned to the business units?
  • How do we access the IT skills required by the business? Should we look at a shared service model, a strategic alignment with a supplier to supply skills on an ‘as needed’ basis?
  • Do we need a Hierarchy? Do we need someone in charge at every level? Can we control chaos? Can we avoid the Peter Principle? (Where someone gets promoted beyond their capability. Nothing to do with me - honest!), will people blossom if no promotion levels just experience levels? Should we put IT staff within the business and buy resources when we need them?
  • How can we help the performance of the business and not hinder it? How can we make IT more adaptable to changes in the business?
  • Is retention of knowledge within the IT arena important or if documented properly can someone else pick it up?

All this adds up to a lean IT function more aligned to the business with only essential skills retained within the organisation and other skills acquired on an as needs basis. Those in house skills would report within the business units. A new role of Chief Process Officer or Business Transformation Director reporting to the CEO and working with the business units to drive aligned business change. The business units would dictate the direction and the projects and bear the IT costs within their units based on clearly defined and deliverable benefits. An optional on demand IT Director would be used a bit like a non-exec to ensure compliance and direction were in line with current thinking.

That’s my starter for 10. Will be interesting to see if we get any other views to add to the debate!


Normunds said...

Hi Peter,

This is excellent post.

I'm IT director in comparably small organization (80 people) and even smaller IT team of 5.

I've been contemplating questions you asked for some time as well, however, answer still avoids me. :)

I think the main area that I'm concerned the most about is how to "control of chaos" as you put it.

This has proven tricky even having central IT team with lot of outsourcing (i.e. buying skills as needed) managed by us but without central oversight I'm afraid that might go really wild each part doing things in their own way.

Chief Process Officer could help mitigate this but question I'd like to put up for discussion is why do we need one if it is already part of job of current IT director/CIO, etc.?

Vaughan Merlyn said...

I love the post, but, IMHO, you are asking the questions from the wrong viewpoint. It feels like you are coming at this from an organizational structure perspective - I think that's wrong - it will tend to trap you in the same mindset from which you are trying to escape!

I like to distinguish between IT - referring to Information Technology ("the stuff" - capabilities, assets, etc.) and IS - referring to the organization with primary responsibility for "the stuff" and typically headed by a CIO.

Today, we must move beyond business-IT alignment, to business-IT convergence. To do so, there will be IT capabilities embedded in the business, others that are shared services, some that are outsourced, and so on. If fact, with this type of capability thinking, it becomes feasible to consider other related capabilities such as those traditionally associated with HR (training and development), with legal, and so on.

By asking, "What capabilities do we need? What characteristics should they embody? How should they be engaged? How funded and governed?" I think you are more likely to come up with the kind of fresh model you are looking for.

As to Normunds great comment, I don't know that you can or should "control the chaos" - you need to decide where chaos is unacceptable (typically core IT capabilities such as operations, support) and where chaos can be leveraged for its emergent properties, ability to finesse complexity, and for its power to drive innovation.

John C said...

Hi Peter,

This is a great thought piece.

I am completely with you that the 'traditional model' is perhaps not ideal.

What I struggle with is what should replace it! We have tried a flat structure and a degree of chaos and the techies feel very uncomfortable with it and performance goes down.

For me, the answer is in business engagement / alignment at all levels in IT (although this is difficult). The structure within IT shouldn't really matter (or be visible) from the outside as long as people can get what they need to help them win work and do work as efficiently as possible.

Of course, Simmons & Simmons now has a "Director of Business Transformation". Might be worth asking Abby to do a guest post for you??

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Krista said...

Embracing an opportunity to reorganize and reshape the organization is also a strategic way to create a new IT culture in the company. To ensure orderly and effective transformation, managers need more visibility and control to use IT fully and serve the enterprise, driving business innovation towards renewed growth. To gain full control and to fully assess organizational IT needs, managers need an overview of all their distributed resources. Such an overview should provide real-time monitoring, from the enterprise level down to an individual user, across any site, location, business unit, country or time zone. With this kind of access to information, a business manager can simplify IT audits, plan a budget more proactively, document compliance, increase productivity, and enhance best practices.