Rethinking the IT Department

Rather than thinking of IT as a single entity, it’s time to rethink the objectives and measures of each of its key components, with specific metrics, budgets, and goals for each.
January 27, 2022
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For almost 2 decades, pundits have been predicting the death of the IT department, with perhaps the most famous example being a 2003 Harvard Business Review article titled IT Doesn’t Matter by Nicholas Carr. Regularly, others have made predictions ranging from the dissolution of corporate IT to its transformation into an embedded function within business units.

Several underlying themes emerge from most of these articles, ranging from the typical complaint that corporate IT moves too slowly to the suggestion that IT be “dissolved” and disseminated into the individual business units. While these far-reaching recommendations make for good reading, they suggest a “one-size-fits-all” approach that might not be right for your organization.

Breaking the Monolith

Perhaps the most critical consideration as you rethink your IT department and its structure is to stop considering IT as one monolithic organization that deserves a universally-applied design. There are operational elements of IT that are well-served by an overarching support structure. Pushing network ops or security down to individual business units is unlikely to provide many benefits versus allowing business units to develop their own customer-facing apps using standard tools.

The distinction that created IT in the first place, a home for all things technology-related, is dated to the point that it’s no longer functional or particularly relevant. Imagine for a moment if companies had a “Math” department that did sales forecasting, credit management, executive financial reporting, and inventory control, all because these functions involved mathematics of some sort. 

While that sounds exceedingly foolish, many companies have created the same structure by lumping all things technology-related together. Managing a global switching network is entirely unrelated to designing a new customer-facing mobile app, just as managing an ERP deployment is unrelated to writing mainframe code to support a legacy application.

Rather than “one-size fits all” approaches, consider different management and organizing principles and how they might be relevant to the various elements of your IT department. Centralized management and cost reduction is an excellent idea for some aspects of the organization, but a recipe for failure for others, just as embedded tech functions with strong autonomy work well for line-of-business apps but would be a disaster for network ops.

Taking IT Beyond Information Technology

With the various functions of your IT department disaggregated into similar parts, it’s time to think about the purpose of these various parts. For some, the end objective is likely service-based, and service-based IT has been a popular goal for many years. Core tech infrastructure like networks, end-user computing, and even more high-value services like Cyber benefit from centralized management, economies of scale, and standardization.

Similarly, defining enterprise-wide toolsets might make sense at the enterprise level. Aggregating purchasing, training, and on-demand expertise around a predefined set of tools allows the organization to develop competencies that can make individual embedded tech teams perform better. This centralization of tools and expertise can also benefit areas like analytics, where the tools are complex, and the skills are costly to acquire.

Finally, many IT organizations have what are in effect product development groups. These teams might create anything from an internal employee tool to a customer-facing app or tech-driven product. These teams need to be more attuned to customer and business unit needs than cost savings or standardization. Therefore, they are less likely candidates for centralization or a cost-management focus.

Structuring around Objectives Rather than Fads

As you consider the various parts of your IT organization and their differences, you can then focus on the objectives for each piece rather than attempting to apply the latest fad in IT management to your entire, diverse IT shop. An organization that benefits from strong leadership, proactive investment, and centralized management like Cyber should have a different set of Key Performance Indicators (KPIs), funding metrics, and reporting relationships than an innovation group.

Defining objectives in this way should also allow you to see unusual potential organizational configurations. Tech innovation might be a natural match with your enterprise strategy group. At the same time, data analytics might fit with the financial reporting organization of some companies and in a centralized function in others, depending on the overall business objectives.

Restructuring around objectives also builds in a compelling rationale for different budgetary needs for the various components of your IT organization. Done correctly, you can clearly articulate why some elements of your IT spending should legitimately be targeted for cost reduction. In contrast, others might require increased funding, regularly funding cycles, or even funds expressly allocated for innovation and experimentation.

Funding discussions with other business units will also become more manageable. As you separate infrastructure and fixed costs, no longer will IT be perceived as a “tax” on other business units. With centralized infrastructure operating under different rules and objectives, that spending no longer needs to be embedded with more strategic investment.

Finally, this focus on objectives can guide partnering and vendor selection discussions. Everyone loves to bill themselves as a “strategic partner,” but there are elements of IT where “good enough” often will suffice. 

Suppose the objective of a component of your IT shop is to deliver a commodity service at a reasonable price point. In that case, a different portfolio of vendors might be considered than what’s appropriate for the tech components of a critical product that’s the linchpin of your market strategy.

The ability to clearly communicate the “rules of engagement” for vendors as you procure their services and ultimately work with them should also link back to the objectives of that component of your IT shop.

A New IT Department

It seems intuitive that different parts of an organization as complex as IT shouldn’t be considered a monolithic whole. However, a history of lumping all things “information technology” into a single organization with a particular set of objectives is difficult to overcome for many tech leaders. 

As you rethink your IT department, start with each component and define clear goals for that component. Done well, you’ll ease everything from selecting the right leaders for the different parts to speeding budgetary discussions.

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