Making IT Work in Your Company, Part 3Part 1 focused on trends shaping IT organizations and how IT should enhance evolving business models. Part 2 outlined an approach to IT organizational alignment.
In the third and final part of this column on IT/business alignment, we conclude our "open letter" to your company's business and IT community - begun in Part 2 - by detailing how services, alternative funding mechanisms and, yes, people play a role in an effective organizational alignment.
The central IT organization should organize itself to provide sets of ongoing and special (temporary) services organized in some specific ways.
Business strategies should drive the whole process. Business strategies (which must be clarified and validated) developed by the lines of business lead to lines of business IT strategies which, in turn, provide input to the enterprise IT strategy (defined as services).
These services represent the specific services that the lines of business (as clients) would accept, reject or modify, as appropriate, and include such activities as desk-top, laptop and PDA management, data center management, communications management, applications management and security management.
-- In-source when the tasks involve requirements --> specification --> and design - and when in-house expertise is deep and available.
-- Outsource implementation via complete and "transitional" outsourcing models where there is a high potential for "knowledge and process transfer" and where the transfer area is a targeted core competency.
-- Outsource when the target is at the back end of the life cycle, when the prospects for knowledge transfer are low, and when the area is not - and should not become -- a core competency.
-- An emphasis on services.
-- Consulting support for each of the service areas.
-- A Program Office (PO) to manage the percentage of work that is outsourced, the account executive structure, and the central IT organization/lines of business prioritization of work; the PO is comprised of representatives from central IT organization and the divisions. -- A technology Council that links the services and management of the central IT organization to the lines of business and divisions.
-- Skillsets must be re-examined: skillsets that supported mainframe-based applications, data center operations, and related activities are less valuable today -- and will certainly be less so in the future -- than architecture design, systems integration, distributed applications (so-called network centric applications), project management and program management skillsets.
-- Incentives must be re-examined: we must revisit the reward structure to make certain that the skills, talent and activities that mean the most to the company are generously rewarded, while those of less importance are rewarded accordingly. It is essential that the "right" message be sent here: employees must believe that (a) there is a clear vision for the business/technology relationship and (b) they will be rewarded for their dedication to this relationship.
-- A new breed of business/IT professionals must be fielded, professionals with an understanding of broad and specific technology trends, business trends, and how to convert the intersection into system requirements and system specifications. Such professionals will work directly with the businesses to understand how technology can be cost-effectively aligned with business strategies.
And Away We Go
There's obviously lots to do. And it won't all happen overnight. The reality of our profession is that they will still be brush fires to extinguish, vendor crises to manage, and financial disasters to avoid. But while all this chaos continues to swirl around us, we nevertheless need to think about how to make our business/technology organization less contentious and more efficient. A series of discussions will begin immediately to decide how to implement the kinds of changes described here. Thanks. (End of open letter.)
This generic organizational structure can be implemented - complete with embedded biases - in your organization.
Organization Effectiveness Metrics
It's critical that you measure the effectiveness of the organizations you create. Annual surveys, interviews and other instruments should be used to determine if things are working - or not. It's best to have the assessments made by consultants with no vested interest in the results.
Depending on what you choose to outsource, you should also develop a set of metrics that will permit you to (a) first compare what you!&ve got now to what was the case before outsourcing and (b) if the outsourcer's performance is up to snuff. Of course there should also be metrics to determine if in-house professional are performing adequately, should you decide not to outsource.
Organizational structures should be volatile as they adapt to new business models, new technologies, and new corporate structures. Prepare for changes long before they need to be implemented!
Click here to read Part 1 of this column.
Click here to read Part 2.
Steve Andriole is the Thomas G. Labrecque Professor of Business at Villanova University where he conducts applied research in business and technology alignment. He is also the founder & CTO of TechVestCo, a new-economy consortium that focuses on optimizing investments in information technology. He can be reached at email@example.com.