Two Organization Questions Facing the CIO

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co-authored with Rob Boudrow

A few days ago, we had a great chat with Marc Cecere, Forrester’s CIO and IT organization expert on the trends and changes we are seeing in IT organizations. The great thing about talking with analysts is that it forces you to summarize your thinking. In gathering our thoughts, we think two types of questions are currently driving re-evaluation of IT org structure:

  1. How can we improve our business operations using technology?
  2. What does IT need to do to best support recent business strategy changes?

Interestingly, both of these questions have emerged as a result of the recent economic downturn and pending recovery, albeit at different times in the cycle. Improving business operations with IT got attention first as each and every part of the business has been under the microscope over the last couple of years. Supporting business changes is a more recent topic as corporate leaders are setting new courses to emerge stronger and CIOs are seeking to understand how to best support the changes.

Improving Business Operations

Where do the business process experts live in your organization?  We’re not talking about the people who are experts in operating the processes every day but those who truly understand the processes that make things run – both the individual processes and the overall “operating model” or how they all fit together.  Some manufacturing firms and those with a strong quality culture have organizations focused on process design and management in addition to line process experts.  Some others have added a process view into their business and/or enterprise architecture planning and measurement.  However, we suspect that for a majority of companies, some of the best process design, analysis, troubleshooting and management skills live in IT.

Many investment banks, where IT is also the product manufacturer, recognized the Ops and Tech synergies long ago and have combined the two into a single organization.  Companies in industries seeking more operational efficiencies have started to explore this combined Tech+Ops organization model too.  We have see early signs of this trend in Health Insurance, P&C Insurance and Financial Services industries where IT also has a significant role in manufacturing.

There are many implications of this combined organization but the most significant is how to maintain the focus on innovation as the process/ops emphasis will surely drive attention to efficiency and productivity.  For organization in which IT is only expected to drive internal innovations, this model may be a perfect fit.

Supporting Business Change

As organizations prepare for another growth cycle, they will at a minimum need to change some of their metrics and some will re-evaluate their fundamental strategies, like one of our global clients.  They have traditionally grown with a North American dominated strategy. Contemplating their next wave of growth, the CEO knew that each region would need their own goals and leadership to drive it. As a result, they have a new set of regional organizations.

What should be IT’s response?  They could stand pat, assuming that they already know their global businesses and are serving them well or they could re-organize to get physically closer to each business and configure each regional IT team for its mission – rapid growth, agility, operational efficiency, etc.

Whenever the discussion centers on the age-old “centralized or decentralized” organization trade-offs, we always come back to one question.  Does the IT organization already operate well using a single set of management and operational processes?  If so, then decentralization of some parts is an option.  If not, then trying to drive fundamental standardization in a decentralized organization is a non starter. The organization must already know how to work together before it starts to separate itself.

We would love to know how the trends in your industry are causing you to re-think your organizations – or not.

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  • Good points, if only the tip of the iceberg. There absolutely still is great opportunity to optimize IT execution, and the means of doing so are changing rapidly (e.g. use of cloud and other ‘off-premise’ solutions, using lean processes, and improving organizational effectiveness. There is also great benefit to be had thru innovation, new software styles (ex: embracing iPad, more sophisticated use of mashups, etc.) and most importantly, new perspectives on IT value.

    What is interesting is that some or even most CIOs may become concentrated on the business relationships (and resulting strength of understanding and alignment) and are leaving these ‘optimization and innovation’ issues to others. This can be ok if the CIO ensures those that ‘really know IT’ are working well with those (who think) they know the business. The synergy between It potential and business change is key…they should not be separated into separate duties.

    The point is that designing great IT (optimizing it, and innovating with it) is best done with the same understanding for business change (where to optimize and where to innovate). Get your organization to be adept at both, in concert, and you have a win/win.

  • Good points, if only the tip of the iceberg. There absolutely still is great opportunity to optimize IT execution, and the means of doing so are changing rapidly (e.g. use of cloud and other ‘off-premise’ solutions, using lean processes, and improving organizational effectiveness. There is also great benefit to be had thru innovation, new software styles (ex: embracing iPad, more sophisticated use of mashups, etc.) and most importantly, new perspectives on IT value.

    What is interesting is that some or even most CIOs may become concentrated on the business relationships (and resulting strength of understanding and alignment) and are leaving these ‘optimization and innovation’ issues to others. This can be ok if the CIO ensures those that ‘really know IT’ are working well with those (who think) they know the business. The synergy between It potential and business change is key…they should not be separated into separate duties.

    The point is that designing great IT (optimizing it, and innovating with it) is best done with the same understanding for business change (where to optimize and where to innovate). Get your organization to be adept at both, in concert, and you have a win/win.

  • This article speaks to much of the dichotomy which is part and parcel of the CIO role today. In addressing much of this I’ve been looking at where the role is heading, and how to to address this direction holistically. At its essence, there is an IT ecosystem which plays a part in supporting technology (both current operational, and future innovation). This extends well beyond the IT department and associated payroll. A key success criteria for CIO’s going forward is understanding how to leverage the ecosystem they are part to bring the maximum value at appropriate cost. [See IT Cost Management via Your Ecosystem http://bit.ly/c7pri2%5D. Each of the aspects you describe can be addressed in different ways, through the balancing of different parts of the ecosystem, playing off the CIO (and their department’s) strengths and weaknesses.

    Great post. I have enjoyed following your thoughts for some time and look look forward to continuing the dialog.

  • This article speaks to much of the dichotomy which is part and parcel of the CIO role today. In addressing much of this I’ve been looking at where the role is heading, and how to to address this direction holistically. At its essence, there is an IT ecosystem which plays a part in supporting technology (both current operational, and future innovation). This extends well beyond the IT department and associated payroll. A key success criteria for CIO’s going forward is understanding how to leverage the ecosystem they are part to bring the maximum value at appropriate cost. [See IT Cost Management via Your Ecosystem http://bit.ly/c7pri2%5D. Each of the aspects you describe can be addressed in different ways, through the balancing of different parts of the ecosystem, playing off the CIO (and their department’s) strengths and weaknesses.

    Great post. I have enjoyed following your thoughts for some time and look look forward to continuing the dialog.

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