IT Organization Structure
Geography or technology can greatly determine the kind of IT organization structure that the vendor will propose. As it evolves, it will become increasingly necessary for the vendor to adapt to the newer structure. Most often, the change at either end for the outsourced portion of the portfolio is reduced to a superficial change of reporting lines with no genuine benefit (disadvantages in some cases) to either party due to the structural change.
If the changes can be anticipated, and mapped correspondingly to the metamorphosis of the IT organization, negotiations should begin with the vendor for appropriate changes to the interface and delivery models. It then becomes feasible to plan for people to work across business lines (if you change to a technology-based organization); governance (escalation channels will change with structural changes); and changes to SLAs and performance measures. Productivity improvements and efficiencies of scale can then be quantified and measured and cost increases can be anticipated.
This, unfortunately, is the most neglected, but perhaps the most important factor in determining a sourcing strategy. Competency hierarchy is the name for the informal power that teams and individuals bring to the table due to their knowledge and ability to deliver.
This is distinct from the organizational silos and hierarchies that are built up. An example would be an individual who knows the software code of a custom, mission critical app so well that it is impossible to remove him or replace him. Such an individual becomes very powerful when projects impacting that specific application are to be executed.
A few questions can be asked to clarify and understand this hierarchy better:
1. Who knows all about a certain application?
2. Who are the people indispensable to the running of the critical applications? Why are they so indispensable? Is it really so complex that it will take years to groom replacements?
3. Who is the go-to person when the core application is to be modified? Is the person an internal player or is the person from one of the IT partners?
These critical roles need to be filtered, classified and tagged as being vital to business-as-usual activities or to enhancement/project related initiatives. With this map, a structure can be drawn outlining the new team to include IT vendor/partners thus minimizing the risks posed by the departure of critical resources. Better decisions can be made by you on retaining some of these people.
Giving weight to factors to determine offshorability is only part of the work. Considering qualitative factors like competency hierarchy, IT roadmap and organization silos and their hierarchies is key to getting a portfolio organized.
Ramesh Dorairaj is vice president and head of a Strategic Account at
MindTree. Ramesh has more than 19 years of industry experience across
domains such as banking, commercial markets, retail, utilities and manufacturing.