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What kind of organization is needed for an effective and relevant IT department? Recently, an article in CIO Online* magazine devoted to the subject aptly stated, ” Nothing lasts forever in IT, including the organizational structure of the CIO.”
Although the organization of the Information Systems Department is not set in stone, change is not an end in itself, especially as it is not always a pleasant experience. It is, however, a genuine act of management, triggering a new dynamic. So how do you organize your IT department? Based on what criteria? What parameters should be taken into account? Here’s how.
How do you structure your IT department?
Organizations that reflect the role of IT
Very often, the organization of the Information Systems Department is primarily a reflection of the vision… of the CIO, or of the General Management to whom he or she reports. This is logical, since the underlying aim of the IT Department’s structure is to ensure operational performance and the permanent alignment of IS with IT and corporate strategy.
For example, an IT department that sees itself as a supplier of services to internal customers (a position that is less and less shared) will generally respond to a fairly classic organization centered around the major internal functions of the IT department:
- a Production and Operations team in charge of the Run on the existing IS,
- aDesign team, in charge of designing and implementing the IT transformation projects that will drive the company’s evolution, and ensuring its maintenance (TMA),
- and finally, a team ofexperts – PMO, project managers, etc. – from which to draw skills as the need arises.
This organization emphasizes operational excellence, but makes it more difficult to position the IT department as a creator of value.
IT Departments wishing to position themselves as partners of the Business Units may prefer a “product” organization. Favored by the DevOps culture, this brings IT teams closer to the Product Owners (POs) within the Business Units. Unlike the traditional structure, design, build and run are no longer as separate as in the past. As a corollary, some of the IT department’s professions tend to specialize (architects, POs, designers, developers, etc.), and its organization mirrors that of the company as a whole.
The visionary IT department will tend to organize itself by taking digital and innovation on board, usually with a dedicated unit that will make the subject visible and ensure that it is treated as such and not relegated to the back burner of emergencies. In the face of new technologies and the acceleration of new digital uses, this is a judicious choice that can limit shadow IT by preventing business departments from directly seizing on innovations that the IT department would not offer them.
The strategist CIO, positioned as close as possible to General Management, often plays a key role in steering transformation. It plays a key role in value creation, with genuine recognition of its contribution to achieving the company’s strategic ambitions, particularly in terms of business. When the CIO’s place is so crucial in the organization chart, it is not uncommon for it to encompass a broader scope than the “traditional” prerogatives of the CIO in the strict sense. Depending on the company’s strategy, this may involve managing Transformation, integrating digital challenges, managing risks, managing all projects, including those that are not strictly IT-related… In this context, it will be worthwhile to reflect this broader scope in the name of the IT Department.
Why question the organization of the IT department?
Define your objectives in advance.
The ideal organization does not exist. Several factors may lead the CIO to question and review his or her structure:
- Within the IT department, the need to instill a new culture and/or revitalize management and the department’s teams. Organizational changes can help to shake things up and reshuffle the deck. In a context where IT talent is in short supply, this can make it easier to retain certain employees thanks to the project supported by the IT department. Renewing teams (both internal and external) can also help to overcome resistance to change. Every 2-3 years, these changes can be truly beneficial.
- Au niveau de l’entreprise :
- a significant change in strategy: merger or external growth operation, internationalization, strategic repositioning of the business, etc. The IT Department must be ready to respond to these challenges and needs, as its organization must be aligned with the company’s strategy.
- budget restrictions or, at any rate, pressure to optimize operating costs
- a strong expectation of openness and transparency vis-à-vis the Sectors, with increased collaboration for example.
- At ecosystem level, changes in the environment are forcing IS – and therefore its organization – to question and evolve : digitalization of business models, new technologies and new uses, accelerated transformations, agilization of processes…
In all cases, setting up a new organization within the IT department is a major management action that will simultaneously :
- revitalize the team;
- be a vector of transformation that enables us to question our management’s meaning and strategy, since it reflects them;
- contribute to the image and enhancement of the IT Department: a new organization is also a communications operation, showing tangibly that things are moving, that the IT Department is getting organized to better address the company’s challenges, etc.).
For all these reasons, it’s important to change your organization on a regular basis, and to adopt a posture of transformation. A successful organization is a living organization; to remain relevant, it must remain in motion and capable of integrating new parameters. In this respect, it is interesting to conceive of the (re)organization of the IT department not as a project that will one day be completed, but as a process – albeit more or less sustained at certain times – of permanent transformation. This permanent movement is all the more interesting in that, by changing an organization, we capitalize on the achievements of the previous model, retaining its benefits and enriching the practices of IT Department staff and their contacts.
What are the trends in IT organization?
If many CIOs and IT managers are overhauling the organization of their departments, it’s because they’re part of an underlying trend: digitalization and the growing power of the digital age, the quest for speed, increased exchanges, more advanced IT integration… These developments reinforce the importance of the IT Department and its vocation and capacity to instill a cross-functional vision in companies, with a strong strategic dimension, to drive and drive innovation, and to lead these changes.
The traditional organizational structure of the IT department seems to have come to an end. It’s striking to see the extent to which the rise of the cloud, on the one hand, and the DevOps approach, on the other, have led many CIOs and IT Directors to rethink the way their department operates, and even more so, their relationship with the Business Units:
- With cloud and SaaS approaches, it has been possible to outsource many tasks, enabling the IT department to refocus on the quality of service provided to business users, rather than on infrastructure administration.
- The DevOps approach has also helped deflate the pressure on Production, with skills management developing more on the Research side.
- For the latter, the emphasis is not only on IT expertise, but just as much, if not more so, on the ability to become specialists in the company’s various business sectors (sales and distribution, back office management, CFO and HR, etc.), even to the point of being able to “plug in” to the organization – and even the company’s organizational chart, in a true partnership approach.
So, while the IT Department remains the central core, over time there has been a clear trend (and interest) in the convergence of different divisions within the IT Department; little by little, the IT Department is extending its role and scope, and bringing several technology functions under its umbrella. This position is all the more legitimate given that IT is seen as crucial in companies, facilitating and accelerating the agilization of processes and practices.
This evolution is also reflected in semantics : once challenged by the emergence of Digital Departments and Innovation Departments, more and more Information Systems Departments are now also embracing Transformation or Organization.
In practical terms, it is therefore not uncommon for IT Departments to group together a dozen or so different departments: business steering and management, cross-functional (PMO), research, experts (data, etc.), support functions (HR, management control, purchasing), production and infrastructure, supplier relations and user support. In addition, the IT Department may be called upon to manage all the company’s PMOs, rather than allowing an AMOA (project management assistance) department to coexist alongside it. It will also often include the CISO (Information System Security Manager) on its staff.
Of course, these different organizational structures differ according to the size of the IT department. In “large structures”, there is more room for manoeuvre.
Our tips for successfully organizing your IT department
- A pragmatic approach to organization. Beware of the temptation to replicate the same model for all parts of the IT department. Excessive generalization can lead to unnecessary complexity, producing the opposite effect to that intended. On the contrary, it may be a good idea to test new organizational methods first on certain IT teams or specific business lines, with employees who are culturally motivated by the change, and to capitalize on the knock-on effect.
- Bring in an outside consultant. Many organizational changes take place after the departure of a CIO and with the help of an interim manager. This is because it is sometimes easier to bring an outsider’s eye to bear on an organization and get things moving. If the CIO is already in place and wants to reorganize his or her own team, a transformation consultant or firm can support the CIO in this reorganization mission, and help set up the associated processes.
- Involve business units and management in the process: what are their expectations, how can we work better together, etc.? In addition to being a prerequisite for the efficiency of the new organization, listening to stakeholders is a strong signal of openness that will contribute to working on the image and marketing of the IT Department.
- Accompanying any change: whether it’s a big organizational bang or a smooth transition, any transition inevitably generates resistance (at best), stress and uncertainty. This is perfectly human, for behind any organizational chart there are none other than the men and women who will be all the more eager to get moving and give their best if they have shared, understood and adhered to the meaning of the new organization, and if this new direction offers them real prospects. Transparency is obviously key in this context. So is working closely with HR to address issues such as skills retention, training and specialization.
- Anticipate the side effects of a new organization. Any change generates a temporary loss of productivity and efficiency, before its full impact in terms of efficiency is realized. This is because it takes time for everyone involved to find their feet and get to grips with the new scope, processes and so on. This means not only planning a realistic transition timetable, but also integrating this impact into the IT Department’s project portfolio management.
- Communicate about the IT department’s organization, especially if it changes. The IT department has often been accused of being opaque, and the technical nature of its various functions has undoubtedly accentuated this. It is therefore essential to explain the new structure, to present the teams and the interactions with the other components of the organization, and to do so to all IT Department stakeholders, especially if they are affected by changes in organization or contacts: other company departments, external partners and service providers, etc.
- Consider changing the name of the IT department, if the new organization justifies it (DSIT, DSIN, etc.) This is often an opportunity to mark the new scope embraced by the IT department, to support the change by opening up a “new era” and to show its meaning.
The ISD in its ecosystem. Mapping organizational models
Irrespective of how the IT department is organized into different departments or teams, there are several models for how the IT department interacts with other departments within the company, some of which may be combined. These models are very often dependent on the structure and size of the group:
- Centralized model : all information systems are in the hands of a single IT department, which oversees them for the entire company or organization, if necessary with the help of local correspondents.
- Decentralized model : each entity in the organization (subsidiary, department) integrates its IT department independently.
- Hybrid model : the most critical functions are managed centrally, while others are left to each subsidiary or entity.
- Matrix model : the IT department is closely meshed with the company’s various departments, with dedicated staff for each entity. However, this open, cross-functional approach can complicate the IT department’s internal operations and processes, since everything has to be managed as a chain.
- Outsourced model : the IS is subcontracted to a third-party company with specialist expertise; the company refocuses on its core business.
- GIE (groupement d’intérêt économique) model: the IT Department is a separate entity within the company, and invoices its services to the various departments or subsidiaries.
Once again, there is no such thing as a good or bad organization – each has its advantages and disadvantages. So, while a matrix organization has the merit of reinforcing proximity with users, it will, on the other hand, require more effort to maintain the fluidity of exchanges within the IT Department.