Organizing IT for success
Design an architecture, set some standards, then sell, sell, sell
The authors discuss an organization model for the New Enterprise Information Technology department. The new model focuses on how IT must become a services-based organization. For IT to be successful in the New Enterprise, changes are required. IT must "win back" users while still supporting standards, procedures, and policies. This, coupled with the culture shock within IT, are the key areas to focus on in effectively supporting today's distributed client/server technology. (2,400 words)
In planning the new distributed enterprise, we've focused on re-engineering business functions and creating new client/server applications to support them. To keep up with these changes, IT must update the way it is organized, how it provides services, and how it improves customer satisfaction. I addition, as if that's not enough, it must do so at reduced costs. That's a tall order, but one that desperately needs to be filled. IT must evolve into a better service organization.
The real problems started seven to eight years ago with the advent of PCs. You know the story: Users installed their own PCs, software, and local area networks (LANs) to support their particular work group. Users became technologists! They began solving their own business problems with their own technology and avoided central IT. And rightly so! We missed the PC wave because we were too controlling, took too long to solve business problems, and charged too much. So IT conceded control of PCs and LANS since we didn't know how to support them and didn't want to fight another political battle.
Now, in the New Enterprise, these issues have come full circle. There are disparate standards in the work groups, but everyone wants to share information. The New Enterprise IT must step up to the task to be successful. We must provide an effective infrastructure to meet the changing business and service requirements of our users. We must become technologists again! End-users should deal with business systems and business requirements, not technology. The new enterprise IT must provide the technical solutions, embrace change, and become the true service organization. Sound difficult? It is! Once control is given up, it is very, very difficult to get it back. But it can happen! IT must become marketing-oriented -- and that's a tough pill to swallow. How can us introverted, controlled IT people get close to our users and sell, sell, sell our services?
`If you build it, they will come'
We like to use the phrase from the movie "Field of Dreams." This really can apply to the New Enterprise IT. If you build an effective infrastructure with services that meet your business-unit/end-user needs, they will return! How do we get started?
The organization model
Let's concentrate on probably the most important piece, the organization. We will discuss an effective New Enterprise IT organization model ("New IT") that can meet the requirements discussed earlier. It may not be exactly right for your organization but it is a model that works (we know!) and may give you some ideas. Refer to the illustration for a view of the New IT.
There needs to be one person responsible for IT. The title and reporting relationships make a difference (i.e., we can usually understand the importance of IT in the enterprise based on where the head of IT reports as well as the person's title). The New Enterprise CIO must be willing to make dictates, understand technology, and enforce the new service model.
Understanding technology is a must because it changes so rapidly, but hard because there may not be enough time or energy to concentrate on it. Our organizational model helps alleviate this issue with a group titled Architects. These Architects, a Corporate Applications group, Business Unit IT managers (or applications development for smaller organizations), and Enterprise Services (the infrastructure) make up our model for the New IT.
One of the most important "new" functions is marketing and sales. This is indicated by a dotted line box -- to show that it may not be supported by head count, but it is a function. All IT employees must become sales people. Marketing/sales is placed on the organization chart because the organization must spend time on it. That means developing a marketing plan and physically meeting with users, departments, and business units to "sell" those services. Along with this pitch, include a document that outlines the services you offer and your pricing. Giving you customers a chance to compare you with the market at large will put their minds at ease and force you (IT) to stay competitive.
To help the CIO, and to get technology back into IT, we recommend a small group of Architects. Since we want Business Unit IT (developers) to focus on business systems, not technology, this function becomes extremely important in the new services model. Architects are full time technologists who look at new technology, interface with business units about technology and their technology needs, and define the three- to five-year strategic plans for IT. If we conceive of these plans as a target with concentric rings, the bullseye representing the beginning stage (possibly the first 6 to 12 months) and the outer ring the last stage, the Architect must be able design technical solutions to business problems in the bullseye area, and then update and modify these solutions in the outer rings. These strategy outlined for the later stages of the plan will of necessity be a little vague, good Architect's will keep abreast of new developments and make this strategy more specific when it becomes practical.
The architects can not be prima donas. They must work effectively with the development organization(s) and the infrastructure operational units (networking, data center, and desktop support). They must produce a "minimum and sufficient" architecture that has the support of the rest of IT and the CIO. It also becomes more and more a full-time job because if the right people fill the position, this group can become a marketing and sales arm.
Another function architects perform in the New IT organization is one of checks and balances. In the old IT when our "customer" came to us with a need for something different or new, we simply said, "No, you must follow the standards that we support," or, "No we don't support that but you can do it yourself (i.e., PCs and LANs)."
In the New Enterprise, we must define and publish standards. If a customer comes to the New IT with the same question, we might indicate that this new widget is not part of our supported standards, but we'll get the architects involved to see if supporting it should be considered. The architects can then determine whether it should be part of the service model, or determine the additional costs/training for IT to support it. This provides richer communications between the user and IT. Yes, it is a full-time job and we do recommend it be staffed from the current operations organization. Why? They understand the business!
This function is fairly self-explanatory based on the title. There have always been several enterprise-wide business applications such as human resources, finance, and payroll. In the New Enterprise, there should be a small, centralized group of developers for these systems. The New IT must have a focus on these applications in terms of architecture and overall cost. Think of those instances when each department or business unit tries to solve it's own issues related to these types of systems and the cost of trying to interface with them from a corporate perspective. For smaller organizations with an IT staff of 50 or less, this group has responsibility for all applications. And, as always, do not separate development of new applications on new technology (like going from mainframe to client/server) into a new group. Keep the groups the same, especially for morale purposes.
Business Unit (department, agency, etc.) IT is responsible for business unit applications. In large corporations each business unit/department has different systems requirements to meet their business needs. A group should be defined to meet those specific needs. Defining an IT function for each allows them to focus on those particular needs. In the New IT, this allows each business unit to have control of systems and application requirements. Each is responsible for maintaining their own set of priorities and backlog, and can make changes accordingly based on their budget. They can change the priorities and reduce/increase the backlog without negotiating with some large, centralized bureaucracy that never meets anyone's needs. This fixes that!
The Business Unit IT Manager (or Director) must report directly to the CIO with a dotted-line relationship to the business unit general manager. This is really the only case of dual-reporting relationships within IT. The group should include both applications development and applications support/maintenance. We recommend the support/maintenance be aligned with the business unit rather than a large, centralized group, this allows each unit to determine their own maintenance/support priorities and backlog. The development and support organizations should be separated, but reporting to the same IT manager. Again, they must be owned by IT so that the CIO can understand and own the total cost of IT and implement standards where possible, such as enterprise-wide application development methodologies and tools (a dictate). Also, by reporting to the CIO, they can be charged to focus on business systems, not technology. (The Architects handle the technology.)
In other articles we have discussed our recommended charge-back model. In the New Enterprise, we charge-back the business unit directly for the resources they use. The business unit feels they are in more control of their costs and priorities because they know what they are paying for and they don't have to fight with others over priorities. The figure shows Business Unit IT 1 through Business Unit IT "N" to further illustrate the need to have one Business Unit IT manager for each (and every) business unit.
Enterprise Services is the infrastructure implementation and operational support function for IT. Infrastructure includes utility-type services provided to the organization by the New IT. These include Networking, Data Center(s), desk-top (user) support, and centralized third-party software services. The infrastructure is where most of the total cost of IT resides and should be centrally controlled and managed. In the new distributed enterprise, there need to be controls and standards down to, and including, the desktop.
The desktop is becoming mission-critical and must be managed. We have coined the term "The Network is the Data Center" to emphasize the need for those standards, controls, and disciplines that were/are used to manage mission critical systems in the data center. In the Old Enterprise desktop support reported to business units. In the New Enterprise we want business units to focus on business requirements, not technology. (This change is very difficult to accomplish and probably becomes a dictate from the CEO/CIO level.) We also want and must understand and manage the total cost of IT!
We've discussed the functions performed by the Networking, Data Center, and Desktop Support groups in great detail in past articles and in our two books, Rightsizing the New Enterprise, and Managing the New Enterprise, so we will ask you to refer to them for descriptions. You may note that this discussion diverges from previous ones in a couple ways, in the past we referred to desktop support as System Administration and didn't mention, specifically as a function, the Centralized Software Services group.
In the New IT, there should be a centralized function, as part of Enterprise Services, that is responsible for all third party software used in the organization. We define third-party software as desktop tools and applications like spreadsheets, desktop publishing programs, and middleware. We also recommend a standard suite of tools that provide more than one solution for each of the functions required because different people like different tools. There should be no dictates in this area.
However, we can help reduce the cost of this suite of tools by working with a purchasing function to negotiate corporate licensing agreements. This goes a long way in helping reduce the total cost of IT. Additionally, any new version/release of the third party software is delivered to the group by the vendor. They are then tested to assure the quality the new version/release before going on the network file server or desktop. This is yet another example of IT dealing with the technology issues rather than having the end-user or business unit license, install, and qualify the software.
We think this model can help the New IT become a true service organization (and, oh by the way, the marketing document should include competitive pricing) that is adaptable to change and supports the corporations' business requirements more effectively.
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