Charting new IT organizations

What will the IT organization of the future look like? We gathered experts for a virtual roundtable discussion about how CIOs are reorganizing their IT operations to improve customer service and gain a competitive advantage from such emerging technologies as wireless networks, unified communications and service-oriented architectures.

Our panel includes: Paul Groce, partner and leader of the CIO practice at CTPartners; Johna Till Johnson, president of Nemertes Research; Mike Jones, CIO of Children’s Health System and a member of the executive board of the Society for Information Management; and Jerry Luftman, distinguished professor at the Howe School of Technology Management at Stevens Institute of Technology.

What are the biggest issues holding back IT departments in terms of their organizational structures?

Groce: One of the largest issues CEOs have is a frustration with CIOs not being in touch with the business, and that frequently is a result of the organizational disconnects between the CIOs’ organization and the business. Unsuccessful CIOs may, in the name of greater cost control and production efficiency, pull all IT resources into a shared services group, but as a result they often lose connectivity to the business. You have to be very careful about what you centralize and decentralize. The issue is this: How can the CIO construct a hybrid model that provides the efficiencies of a centralized organization while still maintaining touch with the business? One of the more effective solutions appears to be the hybrid model that allows centralized production activities but maintains contact with the business through business-relationship managers, who make sure that business needs are heard.

Luftman: We’re really pushing the hybrid or federated organization, which combines the strengths of centralized and decentralized organizational structures. From my research, it’s clear that companies that are federated have a better shot [at] receiving a higher score on alignment of IT and the business. In centralized organizations, the decision makers tend to be reluctant to move to a federated model because they are losing people reporting to them. Another issue is the career for IT professionals in a federated structure because they now report to the business. Another issue is that it’s not just the organizational structure that CIOs need to focus on. If you change your organization but you don’t change your governance processes, it’s not going to work.

Johnson: The top issue holding back IT departments is mapping the technical expertise to the business issues. The cliché is that IT departments need to better understand business issues. That’s not what I mean. They need to take a more holistic view of when and where IT can become a differentiator or a value proposition, and then focus resources on that. The second issue would be convergence. What I mean is not just VoIP; it’s unified communications. That affects messaging people, help desk people, application people, infrastructure people. You’re looking at something that’s critical for the company to run and every user in the company touches. Handling that effectively is very, very critical. The third issue is not new: It’s basic management skills. Management breaks down into projects, processes and people. IT people tend to be poor at one of these three things.