Rethinking the IT Department

For nearly two decades, experts have been predicting the death of the IT department, perhaps the most famous example being a 2003 Harvard Business Review article titled It Doesn't Matter by Nicholas Carr. Regularly, others have made predictions ranging from the dissolution of corporate IT to its transformation into a function embedded within business units.

Several underlying themes emerge from most of these articles, from the typical complaint that corporate IT moves too slowly to the suggestion that IT be “broken up” and disseminated across individual business units. While these far-reaching recommendations make good reading, they suggest a “one size fits all” approach that may not be right for your organization.

Breaking the Monolith

Perhaps the most critical consideration when rethinking your IT department and its structure is to stop considering IT as a monolithic organization that deserves a universally applied design. There are IT operational elements that are well served by a comprehensive support structure. Moving network operations or security to individual business units is unlikely to provide much benefit over allowing business units to develop their own customer-facing applications using standard tools.

The distinction that created IT in the first place, a home for all things technology, is outdated to the point that it is no longer functional or particularly relevant. Imagine for a moment if companies had a “Math” department that did sales forecasting, credit management, executive financial reporting, and inventory control, all because these functions involved some form of math.

Although this seems extremely silly, many companies have created the same structure grouping all things related to technology together. Managing a global switching network is not entirely related to designing a new customer-facing mobile application, any more than managing an ERP deployment is related to writing mainframe code to support a legacy application.

Instead of “one size fits all” approaches, consider different management and organizational principles and how they might be relevant to the various elements of your IT department. Centralized management and cost reduction are a great idea for some aspects of the organization but a recipe for failure for others, just as embedded technology functions with strong autonomy work well for line-of-business applications but would be a disaster for network operations.

Taking IT beyond information technology

With the various functions of your IT department disaggregated into similar parts, it's time to think about the purpose of these different parts. For some, the end goal is probably services-based, and service-based IT has been a popular goal for many years. Core technology infrastructure such as networks, end-user computing and even more high-value services such as Cyber ​​benefit from centralized management, economies of scale and standardization.

Likewise, defining enterprise-wide toolsets can make sense at the enterprise level. Bundling procurement, training, and on-demand expertise around a predefined set of tools allows the organization to develop competencies that can make individual embedded technology teams perform better. This centralization of tools and expertise can also benefit areas such as analytics, where tools are complex and skill acquisition is expensive.

Finally, many IT organizations have what are actually product development groups. These teams can create anything from an internal employee tool to a customer-facing app or technology-based product. These teams need to be more in tune with customer and business unit needs than with cost savings or standardization. Therefore, they are less likely candidates for centralization or a focus on cost management.

Structuring around objectives and not fads

By considering the various parts of your IT organization and their differences, you can focus on the goals of each part rather than trying to apply the latest IT management fad to your entire diverse IT department. An organization that benefits from strong leadership, proactive investment and centralized management like Cyber ​​should have a different set of key performance indicators (KPIs), funding metrics and reporting relationships than an innovation group.

Setting goals in this way should also allow you to see possible unusual organizational configurations. Technological innovation may be a natural fit with your business strategy group. At the same time, data analysis can fit into the organization of financial reporting in some companies and a centralized function in others, depending on the overall business objectives.

Restructuring around goals also creates a compelling justification for the different budgetary needs of the various components of your IT organization. Done correctly, you can clearly articulate why some elements of your IT spending should rightfully be directed toward cost reduction. In contrast, others may require increased funding, regular funding cycles or even funds expressly allocated to innovation and experimentation.

Financing discussions with other business units will also become more manageable. As you separate fixed and infrastructure costs, IT will no longer be seen as a “tax” on other business units. With centralized infrastructure operating under different rules and objectives, these expenses no longer need to be incorporated into more strategic investments.

Finally, this focus on objectives can guide discussions about partnerships and supplier selection. Everyone loves to call themselves a “strategic partner,” but there are elements of IT where “good enough” is often enough.

Suppose the goal of a component of your IT shop is to provide a commodity service at a reasonable price. In this case, a supplier portfolio other than that appropriate for the technological components of a critical product that is the basis of your go-to-market strategy may be considered.

The ability to clearly communicate the “rules of engagement” to vendors as you purchase their services and ultimately work with them should also be tied to the goals of this component of your IT shop.

A new IT department

It seems intuitive that different parts of an organization as complex as IT should not be considered a monolithic whole. However, a history of bundling all things “information technology” into a single organization with a specific set of goals is hard to overcome for many technology leaders.

When rethinking your IT department, start with each component and define clear goals for that component. Done well, you'll make everything easier, from selecting the right leaders for different parties to speeding up budget discussions.