In this article we propose an Information Technology (IT) organisation design that is fit for the twenty-first century. An IT organisation design that is in tune with business, lean and effective. The model is a marriage of structural cybernetics and the core IT capabilities.
Since this guide covers a lot of ground and is a long read you may want to check out the table of contents below for some quick jumping around.
Table of Contents
IT Organisation Design
In the 1990s N. Dean Meyer extended the works’ of W. Ross Ashby and Stafford Beer and developed an area of management cybernetics called structural cybernetics. This field of research is concerned with the issues of organisational design and its impact on performance. In his book Structural Cybernetics: An Overview* [UK Edition]* Meyer argues that organisational dysfunction, political infighting, bureaucratic culture, fragmentation, weak strategic alignment and so on are often attributed to defective organisational structures.
Cybernetics or systems science is the multidisciplinary study of complex dynamic systems and connects the fields of engineering, biology, neurology, sociology, psychology, philosophy, and organisational theory. Whether you realise IT or not, Cybernetics affects everyday life in some way. For example, the way a thermostat controls heating in your home, the functions of a personal computer, the project control cycle or the Deming — plan, do, check, act — cycle. That is, the idea of control loops and feedback.
Correspondingly, the sub-discipline of management cybernetics is concerned with the application of cybernetic laws to organisations and to the interactions within them and between them. In other words, every employee affects business outcomes in some way.
Structural cybernetics provides a model of IT organisation design that creates high-performance teams and empowers employees. By building flexible and entrepreneurial organisational structures that radically change the way the organisation works people are enabled and can do the job they were employed to do without risk of confusion, territorial dispute, or unnecessary management intervention.
Structural Cybernetics and IT Organisation Design
Meyer modelled much of his work around IT organisation design and claims that structure is often the root cause of common information systems failings.
For example, a lack of customer focus, poor team work, or a disjointed technical architecture. This is not that surprising. Many organisations formed their information management departments during the 1960s and 1970s when computing or data processing, office automation and communication technologies were disparate and in their infancy.
With IT, which has rapidly increasing variety, these areas now converge and encompass the whole business. Yet IT organisation design hasn’t changed a great deal in years with most structures evolving over time to accommodate new technologies, projects, and services.
We’ve seen centralisation, decentralisation and re-centralisation, and the addition of new functions to support new technologies. Whilst tinkering at the edges has some benefits these are usually short lived and do not address the underlying problem with many organisational structures.
Structural issues often point misleadingly to people, process, and culture.
- Confused accountability and territorial disputes – Unclear boundaries and accountability lead to confusion and indecision. Time is spent unnecessarily to resolve internal disputes. Managers spend time dealing with operational problems rather than leading their teams or transformational work.
- De-motivated staff – When employees are not in control of their work they feel de-motivated. If organisations place credence on organisational hierarchy instead of professional competence the structure dis-empowers people, stifles creativity, and creates generalists. Expertise is lost to the organisations because the only way to progress careers is to switch jobs or move into management roles.
- A lack of teamwork – A lack of cooperation and tendency to pass the buck (not taking responsibility because IT is someone else’s problem.) Teamwork often suffers when boundaries overlap or are unclear. For example, where accountability is undefined and responsibility rests with more than one team or function.
- Fragmentation or disintegration – In dysfunctional organisations people tend to focus on their work without regard to the broader issues of standards or architectural integration. Moreover, projects tend to dictate technological direction resulting in systems that are disjointed and difficult to support.
- Mistrust – A reluctance to share information because the IT organisation serves its own interests and not those of the business. This results in mistrust and a diminished place within the organisation.
- A slow pace of innovation, outdated skills and technology – Managers should lead the organisation toward continual improvement not get embroiled in day-to-day work. A successful organisation needs to innovate and develop. This is particularly true of the IT organisation where there is an increasingly broad range of specialist disciplines involving the management of information. Unfortunately, some organisations discourage continuing professional development resulting in a loss of expertise and the creation of generalists. IT should be an enabler for change but can be a source of resistance to change. What’s more, world class organisations need experts!
In a nutshell, if IT organisation design is impeding the efforts of staff the IT organisation needs nothing less than total re-organisation.
Spotting IT Organisation Design Dysfunction
When IT organisation design is the primary cause of IT service performance issues—a lack of customer focus and strategic alignment, poor teamwork, deficient methods, a shortage of innovation, and disjointed information architecture — it is likely that the IT organisation suffers structural dysfunction
- Any particular function is likely to be performed on a part-time basis (or not at all) by people whose primary focus is on another function altogether. This leads to a lack of professionalism and slow progress. Consequently, critical activities are not performed or performed infrequently. For example, service and contract management may be included in the job description of a service delivery manager who finds little time to deal with IT because of day-to-day operational issues.
- A group is expected to do more than one function resulting in too much ground to cover or conflicts of interests. For instance, delivering projects whilst supporting day-to-day operations.
- Like functions are located across many offices resulting in a loss of peer integration, architectural fragmentation, and overlapping territories. When organisations centralise IT functions they often keep the original team structures and create duplicate functions that support either specific technologies or parts of the organisation. This can lead to fragmentation, poor teamwork (territorial disputes) and information silos.
According to Meyer IT organisation design can overcome these problems by creating four major IT groups (Meyer also describes a fifth — audit — but we have omitted this.) They are
- Technologists – These units build innovative technical solutions. There are two types of technologists: application specialists who are responsible for data-specific systems and base technologists who are specialists in component technologies and off-the-shelf tools.
- Service bureaus – These units are dedicated to providing reliable and efficient operational services. There are two types of service bureaus: machine-based service bureaus own and operate shared-use systems and sell services that are primarily produced by machines and people-based service bureaus offer services produced by people not machines.
- Architects – The architect unit is responsible for assembling key decision-makers and defining the information architecture for the business. This small unit will build a consensus for standards, guidelines, and statements of direction that constrain the design of systems for eventual integration.
- Consultants – The consultants are responsible for understanding the business and applying methods of business analysis. There are strategic consultants who serve key opinion-leaders in the business, and business consultants who are available to anyone in the business.
A New IT Organisation Design
When introducing a new IT organisation design we prefer to adapt Meyer’s model around the business partnering role model and the core capabilities of the IT service.
Adapting Business Partnering for Information Technology
David Ulrich introduced the most common Human Resources (HR) roles model in the late 1990’s — HR Business Partnering — which describes the movement from a functional HR orientation to the strategic business partnership. Business partnering requires a fundamental re-think of what HR is for and how HR success is measured.
In summary, the model introduced four roles
- Strategic partner
- Change agent
- Employee champion
- Administrative expert
Strategic partnering is about the alignment of HR activities and initiatives with business strategy. Business partnering is the responsibility of HR management and HR business partners. However, IT is not simply the introduction of new roles. IT is a paradigm shift requiring cultural and structural change.
The change agent role supports the business during periods of transformational change. IT is the role of human resources to support change by ensuring the organisation has the capacity for change.
The administrative expert role is about ensuring that high quality low-cost HR services are delivered to the organisation.
The employee champion role is about understanding the needs of the business and its employees and protecting these interests in times of organisational change.
Each of these roles is essential and cannot be fulfilled by simply introducing new roles to the organisation. Business partnering requires structural and attitudinal change plus training and development. Moreover, a balanced approach is needed to ensure that each role is properly developed. Typically, the HR function is reorganised around three main pillars: a shared service centre, centres of excellence, and strategic partners.
The administrative expert forms a single unit that handles all the routine or transactional HR services for the business. This is often facilitated by an HR database or information system that integrates the routine HR procedures. The idea of a shared service centre is to provide low-cost HR administration to free up time for HR to be more strategic in its thinking.
Applying the Model to Information Technology
There are many similarities between HR and IT functions: a supportive role, the provision of transactional services, a strategic role within the organisation, and the need for expert knowledge. Consequently, IT is not surprising that Ulrich’s model can be adapted to information technology management and IT organisation design.
Whilst the initial aim of the model is cost efficiency—using a shared service centre to provide low-cost IT administration and transactional service to the business—the model is also about adapting IT to fit modern business practice. That is, making IT fitter and stronger.
This approach correctly implies that IT has growing importance in the organisation and must be more strategic. This leads directly to the creation of IT business partners: expert and knowledgeable managers who work closely with senior management and departments to provide relevant and timely IT delivery. By working more closely with the business IT is better able to understand the organisation and the challenges IT faces. Consequently, IT can deliver innovative technology solutions that enable the business rather than simply supporting it.
There are six building blocks in our variant model of IT organisation design
- Core infrastructure services own and operate the information systems for use by others. They include the data centre, network operations, telecommunications, storage, and printing services. This function is delivered by shared services.
- Support services provide routine services that are performed by people that includes the service desk, installation and repair, procurement (purchasing) and administration plus other services that help the other functions deliver IT products to the business. This function is also delivered by shared services.
- Applications specialists design, procure, build and maintain data-specific software for transactional processing. They include most systems analysts and programmers. This function is delivered by centres of excellence.
- Base technology specialists design, procure, build and maintain all technologies other than transaction-processing applications including systems software and hardware, telecommunications, software and information engineering, end-user computing, and information disciplines. This function is delivered by the centres of excellence.
- Architects facilitate agreement on standards and guidelines that allow technologists to act independently in response to business needs and yet still progress toward architectural integration. This function is also delivered by centres of excellence.
- Strategic business partners are the primary relationship to the business. The business partner works with business leaders to transform business strategies into information systems requirements. This function is delivered through business partnering.
The benefits of business partnering and a balanced IT organisation design include
Specialism – Each unit will be specialists in its field of expertise resulting in increased productivity, quality, and innovation. Units are empowered to act independently whilst operating within clearly defined standards and guidelines.
Professionalism – Peer interaction is increased, speeding up the pace of learning and innovation, and improving productivity. Presently, we see a replication of effort with expertise developed in one area not shared across the service.
Architectural integrity – Since each unit is collocated and there is a well defined architecture function, teams cannot develop their own culture, practice and standards. Once again, quality, productivity and innovation improve because experts work together to agree upon standards, practice and design principles.
Improved relationships – By aligning IT and business strategy IT is positioned as an enabler and service provider. Effective business partnering will help IT engage in the business planning process from the outset and forge strong working relationships. However, business partnering is less about structure and more about skills: strategic thinking, consulting, relationship management, networking, business and financial understanding, change management, influencing, political awareness etc.
Strategic direction – Determined by strong leadership and strategic business partners. IT investments and resources are steered by business strategy and business priorities.
Effective use of resources – The teams are managed as a single unit and can better accommodate and control resource demands. Whilst the technology specialist may still need to fix problems affecting service delivery they are not responsible for service support.
Application life-cycle management – The structure differentiates between governance, implementation and in-service support to ensure teams focus on their core capabilities. Moreover, role and responsibility is well defined and conflict of interest eliminated.
Core capabilities – The IT organisation is designed to strengthen the core capabilities; critical functions are performed by a single team or unit. Shared services are dedicated to providing a reliable and efficient operational service. The centres of excellence define architectural standards and build innovative technical solutions. Strategic business partnering provides a link with the business and determines IT strategy.
Creative Commons image courtesy World of Good.