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What kind of organizational structure is needed for an effective and relevant CIO department? A recent article in CIO Online* on this topic aptly noted: “Nothing lasts forever in IT, including the CIO department’s organizational structure.”
While the structure of the Information Systems Department is not set in stone, change is not an end in itself—especially since it is not always well received. It is, however, a genuine act of leadership that sets a new dynamic in motion. So how should you organize your CIO department? Based on what criteria? What factors should you consider? Here’s a closer look.
How should the CIO be structured?
Organizations that reflect the role of IT
It is often observed that the structure of the Information Systems Department primarily reflects the vision… of the CIO, or of the senior management to which he or she reports. This makes sense, since the underlying purpose of the CIO’s structure is to ensure operational performance and the ongoing alignment of the information system with both the IT strategy and the company’s overall strategy.
Thus, a CIO that sees itself as a provider of services to internal clients (a view that is becoming less and less common) will generally adopt a fairly traditional organizational structure centered around the CIO’s major internal functions:
- a Production and Operations team in charge of the Run on the existing IS,
- a team known asthe “Studies” team, responsible for designing and implementing IT transformation projects that will drive its evolution and ensure its maintenance (TMA),
- and finally, a team ofexperts—PMO staff and project managers—from whom we can draw on skills as needed.
This structure emphasizes operational excellence, but makes it more difficult to position the CIO as a value creator.
An CIO seeking to position himself as a partner to business units may opt for a “product-centric” organizational structure. Driven by the DevOps culture, this approach brings IT teams closer together with Product Owners (POs) within the business units. Unlike the traditional structure, the design, build, and run functions are no longer as separate as they once were. As a result, certain roles within the IT department tend to specialize (architects, POs, designers, developers, etc.), and its organization mirrors that of the company as a whole.
A forward-thinking CIO will tend to organize itself by integrating digital technology and innovation into its structure, most often through a dedicated unit that raises awareness of these issues and ensures they are treated as such, rather than being sidelined by urgent matters. In the face of new technologies and the rapid growth of new digital uses, this is a wise choice that can limit shadow IT by preventing business units from directly adopting new solutions that the CIO would not have proposed to them.
The CIO, positioned close to senior management, often plays a key role in IT department steering. It thus plays a key role in creating value, with genuine recognition of its contribution to achieving the company’s strategic goals, particularly in terms of business outcomes. When the CIO’s role is so crucial within the organizational structure, it is not uncommon for its scope to extend beyond the “traditional” responsibilities of the CIO in the strict sense. Depending on the company’s strategy, this may include steering the digital transformation, integrating digital initiatives, managing risks, and overseeing all projects—including those that are not strictly IT-related… In this context, it would be worthwhile to reflect this expanded scope in the CIO’s title as well.
Why question the structure of the CIO?
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 CIO department, there is a need to instill a new culture and/or reinvigorate the department’s management and Teams. Organizational changes can thus help shift the status quo and reshuffle the deck. In a context of IT talent shortages, this can help retain certain employees through projects led by the CIO. Renewing teams (both internal and external) can help overcome change resistance. Every 2–3 years, these changes can be truly beneficial.
- Au niveau de l’entreprise :
- a significant shift in strategy: a merger or acquisition, international expansion, strategic repositioning of the business, etc. The CIO must then prepare itself to address these challenges and needs, as its structure 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 CIO’s image and visibility: a new organizational structure is also a communication initiative that tangibly demonstrates that change is underway, that the CIO is reorganizing to better address the company’s challenges, and so on.
For all these reasons, it is therefore important to regularly adapt the organization and adopt this mindset of transformation. A successful organization is a dynamic one; to remain relevant, it must stay in motion and be able to incorporate new factors. In this regard, it is worthwhile to view the (re)organization of the CIO department not as a project that will one day be completed, but rather as a process —admittedly more or less sustained at certain times—of ongoing transformation. This ongoing process is all the more valuable because, by changing an organization, we build on the achievements of the previous model, retain its benefits, and thereby enrich the practices of CIO staff and their counterparts.
What are the trends in CIO organization?
The reason many CIOs and IT Managers are undertaking a restructuring of their departments is that these efforts are part of a broader trend: digital transformation and the growing influence of digital technology, the pursuit of speed, increased collaboration, and deeper IT integration… These developments reinforce the CIO’s influence, its purpose, and its ability to instill a cross-functional vision with a strong strategic dimension within companies, to drive and spearhead innovation, and to lead these changes.
The traditional organizational structure of the CIO thus appears to be a thing of the past. It is striking to see how the rise of the cloud on one hand, and the DevOps approach on the other, have led many CIOs and IT directors to rethink how their department operates—and, even more so, their relationship with the business units:
- With cloud and SaaS solutions, many tasks have been outsourced, allowing the CIO to refocus on the quality of service provided to business units rather than on infrastructure management.
- 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.
Thus, while the IT department remains the core of the organization, over time there has been a clear trend (and growing interest) toward the convergence of various divisions within the CIO department; little by little, the CIO is expanding 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 within companies for facilitating and accelerating the adoption of agile 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 practice, it is therefore not uncommon for CIOs to encompass around ten different divisions: business oversight and management, cross-functional (PMO), research, specialists (data, etc.), support functions (HR, management control, procurement), production and infrastructure, supplier relations, and user support. In addition, the CIO may be called upon to steer all of the company’s PMOs rather than allowing a separate project management office (PMO) to operate alongside it. It will also be common for the IT department to include the Chief Information Security Officer (CISO) among its headcount.
Of course, these organizational structures vary depending on the size of the CIO. In “large organizations,” there is greater flexibility.
Our tips for successfully organizing your CIO department
- A pragmatic approach to organization. Be careful not to fall into the trap of applying the same model to every aspect of the CIO’s office. Overgeneralization can lead to unnecessary complexity, which would have the opposite effect of what was intended. Instead, it may be more effective to first test new organizational models within certain CIO teams or specific business units, working with employees who are cultural drivers of this change, and leverage the ripple effect.
- Bring in an outside consultant. Many organizational changes take place following the departure of a CIO and with the help of an interim manager. Indeed, it is sometimes easier to take an outside perspective on an organization in order to drive change. If the CIO is in place and wishes to reorganize their own team, a consultant or transformation firm can assist them in this reorganization effort and support the implementation of the associated processes.
- Involve business units and management in the discussion: what are their expectations, how can we work together more effectively, etc. In addition to being essential to the new organization’s effectiveness, listening to stakeholders sends a strong signal of openness that will help enhance the CIO’s image and marketing efforts.
- 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. Before changes fully take effect in terms of efficiency, they inevitably lead to a temporary loss of productivity and effectiveness, as each stakeholder adjusts to the new scope, processes, and other changes. This therefore requires not only establishing a realistic transition timeline, but also factoring this impact into the IT department’s steering of its project portfolio.
- Communicate about the CIO’s structure, especially if it is changing. The CIO has often been accused of a lack of transparency, and the technical nature of its various roles has undoubtedly exacerbated this. It is therefore in our best interest to explain the new structure, introduce the teams, and describe interactions with other parts of the organization to all CIO stakeholders—especially if they are affected by changes in the organizational structure or points of contact: other departments within the company, partners, and external Contractors, etc.
- Consider changing the name of the CIO if the new organizational structure warrants it (CIO Services, CIO Operations, etc.) This is often an opportunity to highlight the new scope of the CIO, to support the change by ushering in a “new era,” and to demonstrate its purpose.
The CIO in Its Ecosystem: Mapping Organizational Models
Regardless of how the CIO is organized into different departments or teams, there are several models for how the CIO interacts with other departments within the company, and some of these models may overlap. These models are very often dependent on the structure and size of the organization:
- Centralized model: All IT systems are managed by a single CIO, which oversees operations for the entire company or organization, with the assistance of local representatives as needed.
- Decentralized model: Each unit within the organization (subsidiary, department) integrates its CIO independently.
- Hybrid model : the most critical functions are managed centrally, while others are left to each subsidiary or entity.
- Matrix model: The CIO is closely integrated with the company’s various business units, with dedicated staff assigned to each unit; however, this cross-functional and open approach can complicate the CIO’s internal operations and processes, as everything must be managed in a chain-of-command structure.
- Outsourced model : the IS is subcontracted to a third-party company with specialist expertise; the company refocuses on its core business.
- Economic Interest Group (EIG) model: The CIO operates as a separate entity within the company and bills its services to various departments or subsidiaries.
Once again, there is no such thing as a “right” or “wrong” organizational structure; each has its own advantages and disadvantages. For example, while a matrix organization has the advantage of fostering closer ties with users, it also requires more effort to maintain smooth communication within the CIO’s office.