Supporting Organizational Structures
To anticipate and thereby avoid the crises that change can induce, IT managers, be they in SMBs or large corporations, must understand the life cycle of these changes and design their own organizations and infrastructures to adapt to them over time.
Though it has become fashionable to promote the idea that the future belongs to the small, nimble enterprise, the facts seem to point elsewhere. Many large-scale enterprises have enormous vitality and can resolve the dilemmas that confront all organizations today rather efficiently. Indeed, it is this ability to combine seeming opposites that marks the progress of leading firms such as General Electric, IBM, and the other leading profit earners of the world.
Resolving the managerial dilemmas of scale and adaptability requires experimentation and transformation. The certainties of yesterday and a belief in one-best-way to manage in any industry have been replaced by a willingness to try out alternative possibilities.
This willingness on the part of larger companies is driven by competitive outcomes that are no longer decided solely by the size of the weapons brought onto the field, but also by the human and organizational ingenuity of each enterprise to gain the maximum stretch and leverage from the available physical resources.
This article is about different organizational structures, how and why they come about, and what part IT can and should play in supporting them.
When an organization is first formed, business design typically receives little thought from the founding entrepreneurs. Everyone is a jack-of-all-trades. The fledgling organization is staffed with a small number of people who pitch in to help with sales, production, and record keeping. Enthusiasm abounds. The entrepreneurial firm is fun and invigorating. Adrenaline flows as everyone works together to put new products or services into the hands of customers.
Over time, however, problems often emerge. Increasing size and complexity result in chaos and missed opportunities. This usually leads to the hiring of a new professional manager to bring discipline and direction to the business. This new manager typically comes from a successful, mature business and brings the knowledge and experience to install systems and structures to get the business back on track.
In contrast to the free-for-all that characterized the start-up phase, decision making becomes highly centralized. Now rules and standard operating procedures are implemented and enforced. Discipline is imposed through the adoption of budgeting and inventory management techniques.
Unfortunately, specialization through functional orientation again brings unforeseen problems. Functional units become insulated from the marketplace, and the business begins to loose touch with its customers. Employees who joined during the exciting start-up years discover that the company is no longer a fun place to work. The discipline and centralized decision making have become stifling.
The leader is blamed and a new leader is recruited from a business known to delegate authority. Quickly, the new manager uses his or her experience to decentralize decision making.
As with the previous stages, however, growth through delegation creates its own set of problems. The decentralized structure creates independent fiefdoms whose unit managers are protected from the oversight of the head office. Coordination suffers, resources are wasted, and profitability declines leading to a crisis of control.Another revolution occurs. A new top management team is brought in to restore head office control and increase coordination between units. A segment structure is overlaid on the business units, and new centralized staff groups assume responsibility for planning, coordination, and resource allocation.
Business unit managers must now obtain approval from powerful headquarters staff specialists before embarking on any major strategy commitment or allocation of resources. A great deal of time is devoted to meetings to set and review strategy, allocate resources, and evaluate segment performance.
Over time, as central staff groups become more powerful, yet another crisis occurs, this time a crisis of red tape. Operating managers feel that decision making has become burdensomely slow. A great deal of time is wasted in the corporate staff meetings. More focused and nimble competitors are overtaking the company in the marketplace.
In the final stage, a new manager is hired again. This time, however, the mandate is to cut through the bureaucracy and get back to basics. The organization is radically simplified; non-core businesses are sold; centralized staff groups are dismantled; and direct accountability for results is again emphasized.
As the structure of an organization changes, so also do the business processes that make up the organization.
The CIO and IT Staff
In the early days of IT, people were often paid to develop information systems without being held accountable for the expected benefits. Some years later, IT professionals became more involved with business strategists. Today, business process is one of the first thing a CIO or an IT staff member should think of because business process is now at the core of an IT organization's existence.
To that end, a holistic picture of a business process must include not only the relevant software, data feeds, reports, and databases, but also show how these elements are both embedded and flow together, alongside manual activities, operational workflow, and other business functions.
For better or worse, the job of the CIO is to know "everything" about a business process, including how and when its about to change. That's not to say that he or she and the IT staff should be accountable for all the details of a particular business picture, but it is to say that they should know about process analysis and participate in it.
BPM, SOA and ESB
In the years ahead, service-orientated architecture (SOA) business process management (BPM) products promise to transform business systems development from a slow, error-prone manual coding effort into the rapid, automatic generation of executable BPM code. Until the recent past, when business changes occurred, we have had to manually change code in monolithic programs and manually retest. Instead, using todays SOA BPM products, these changes can be made diagrammatically at the process model or workflow diagram level. Executable code that reflects these changes is then automatically regenerated.
SOA BPM products provide rapid response rates, and boost the ROI of the solution because they help ensure that business goals are in line with the BPM solution, regardless of whether those goals change daily or monthly.
Whether its SAP, Oracle, or Microsoft (the major vendors of BPM packages), R.I.M. (the leading vendor of handheld wireless devices), or Nuance (the leading vendor of speech recognition software), industry leaders (and followers) are delivering web services-enabled applications. (SOA and web services are two different things, but web services are the preferred standards-based way to realize SOA.)But, mature, generally larger companies must often include legacy or other not-ready-for-SOA applications in their new solutions. At first, this was a limiting factor. Today, a simple screen scraper can often provide access to an early mainframe or other application. However, connecting to an array of target systems like some or all of
is more likely the case and, fortunately, facilitated by a solution called the enterprise service bus (ESB). ESB is an architectural pattern that addresses this end-end integration challenge.
It is a software infrastructure that enables SOA by acting as an intermediary layer of middleware through which a set of reusable business services are made widely available. However, nothing in SOA demands an ESB.
A comprehensive discussion of ESBs and many related topics, while beyond the scope of this article, is available in the Session 8484 of the 2007 JavaOne Conference.
Today, we have rapidly changing organizational structures that morph the business processes by which these organizations operate. At the same time, we have new software applications that adapted rapidly to the needs of these transformed processes.
In terms of business and information technology alignment, however, no technology can match the value of a good workshop with cross functional role players who dialog and brainstorm business and information technology. No information rendering is more inspiring than a session of free thinking about the business and technology issues facing a company.
Reports, scorecards and key performance indicators are useless if they are not augmented with human, face-to-face communication. Formal and informal meetings help people to put context to information and to internalize meaning from information.
The challenge ahead is to structure the IT organization so that it is headed by a CIO who no longer makes decisions unilaterally but, rather, makes them as part of a decision-making group that includes other key players from across the entire organization.
Marcia Gulesian has served as software developer, project manager, CTO, and CIO. She is author of well more than 100 feature articles on IT, its economics and its management, many of which appear on CIO Update.