Few enterprises stay the same over a period of five to ten years. Their business grows. Their products, operating locations, and channels change. Their bias toward centralization or business unit independence shifts. Supported technologies change. In addition, their degree of dependence on IT services increases. Expectations of staff for increases in responsibility and career mobility increase over time. An IT organizational structure that has served the enterprise well for a period, if it stands still, can fail to meet these evolving needs.


Change Triggers
A number of situations can strain the IT organizational structure:

" Major increase in IT responsibility because of centralization, mergers, or acquisitions. The resultant IT portfolio will be more complex and the user population will expand in numbers and in the diversity of their requirements. IT management will need to allocate more time to planning and client communication, leaving their staff to make more of the tactical and operational decisions. As an example, after an acquisition, an IT Manager may no longer have time to coordinate his network staff and may have to delegate to another individual.

" Reduction in IT workload due to decentralization, outsourcing, or adoption of Software-as-a-Service. Such organizations will typically have too much management and too many layers. Failure to act to simplify the structure will attract the attention of the CFO, who will dictate changes.

" Implementation of major new applications or integration of previously independent applications. New organizational units may be required to manage the development, deployment, and support of new applications. For example, an enterprise planning the deployment of a Business Intelligence system will likely need a unit that will coordinate this project. Units responsible for individual applications may require grouping under the same manager if they need tight integration. For example, the deployment of a CRM system might require integration of two groups that currently maintain a Sales system and a Customer Service system separately.

" New staff. Existing staff may have limited ambitions for career progression or technical variety. However, new staff, especially younger IT employees hired to replace retiring workers, are likely to expect more opportunities. Flat organization structures and isolated responsibilities are a bad sign for the ambitious. Consider two organizations with three network specialists, one for the voice systems, one for the WAN, and one for the LAN. The organization that manages the three as a team, with someone responsible for managing the team, will perform better than one that keeps each specialist working alone on his or her area of responsibility with little management focus. Enterprises with unattractive career potential will likely attract lowest quartile employees.


Weaknesses in IT Organization Structures
Certain aspects of organizational structure will either enable or inhibit effective change:
" The number of managers and number of management layers. Generally, fewer managers and management layers improve costs and communication. However, as the complexity of the work increases, either some managers' responsibilities should be narrowed down (resulting in the need for additional managers), or lower management levels must take on some of the responsibility from their boss (resulting in an additional management layer).

" Organizing staff into groups or teams. When enterprises organize individuals with related responsibilities (like network management, help desk, or a major new application) into coherent teams with a defined supervisor or manager, the staff work well and have an opportunity to develop broader capabilities. When a manager who is increasingly facing new challenges directly manages many staff with diverse responsibilities, he or she will not have the capacity to focus on sub-teams unless he or she creates an additional management layer. Staff will likely operate as individuals rather than as teams.

" Recognizing who has management responsibilities and capabilities. Some enterprises maintain a flat organization structure on paper, but expect technical staff to take on supervisory responsibilities. Few employees will be prepared to focus on developing their managerial rather than their technical skills if their job title and description reflect only technical responsibilities.

" Succession planning and staff development. Growing IT organizations need staff that have developed the potential to take on broader and more responsible roles. Enterprises that fail to develop succession plans, minimally cross-train staff, or are unable to attract top-notch new employees, find it difficult to deliver required service levels in a changing environment.


Recommendations
All enterprises should assess their organizational structure annually. Those planning significant changes in IT responsibility or in the application portfolio should simultaneously conduct a review of structure.

1. Recognize the triggers of change. Do not wait until inadequate structure begins to inhibit performance.

2. Assess whether current management roles are still appropriate. Expansion of IT responsibilities often requires more management layers and an increase in individual management accountability. Reduction in responsibilities means fewer layers and fewer managers.

3. Clarify or redefine management roles. As staff take on new management responsibilities, ensure that their titles and objectives reflect the management role. For example, in an acquisition, as the responsibility of leads or supervisors increases, upgrade their position titles and job descriptions. When decentralizing or outsourcing, downgrade titles and responsibility descriptions where appropriate.

4. Plan succession and invest in staff development. Build a team that is prepared to take on more responsibility successfully.


Bottom Line
The organizational structure of IT, effective in the past, can become insufficient to support the needs of enterprises that are growing or diversifying. Recognize which recent or planned business changes could stress the current IT organization structure and then take corrective action.