Making IT Work in Your Company, Part 2

  • IT should organize accordingly:
  • — IT should evolve to a proactive decision-making and problem-solving body: The

    technology decision-making organization should be comprised not only of technology

    professionals but business representatives as well.

    — The central IT organization should establish a Program Office (PO) that will manage

    all outsourced activities, all account executive activities, and those “negotiations”

    activities that characterize so many of the interactions with the businesses. This PO

    should be staffed by central/enterprise IT and representatives from the lines of


    — The office of the CIO of the enterprise should create deputy CIO

    positions to be filled by technology representatives from the lines of


    — Enterprise IT should organize according to the targeted enterprise activities,

    according to the percentage of support that is outsourced, and according to what the

    businesses need and will find useful. The organization should be defined via a

    partnership with the lines of business (who – as “clients” – have a clear

    vested interest in the way enterprise IT is organized). The central IT organization

    has a clear vested interest in defining an organization the businesses will find

    useful. This is not a call for reengineering, which when done in-house nearly

    always fails; rather, the suggestion is to identify – with the help of the divisions –

    a slate of activities and capabilities the businesses would find valuable and then

    back-fill the organization into these requirements.

    — The central IT organization should establish Centers of Excellence on a temporary

    basis. For example, when there is a cross-divisional need like in the areas of Year

    2000 compliance or eBusiness, Centers of Excellence, staffed by enterprise and

    lines of business professionals.

    — IT should take the lead in massing the talent and technology to develop solutions

    to problems that all the businesses face. Once the problems have been solved, the

    technology should be exported to the businesses, making room for the next Center (or

    “tiger team”). These Centers collectively represent the “special services” the

    central IT organization provides to the lines of business.

    — Central IT should organize a small set of (excellent) “consultants” that will

    support the businesses in the enterprise areas. These consultants should not be

    charged on a fee-for-service basis. Instead, they should be (a) charged to tax or (b)

    embedded in the rates. However, over time – and once value has been demonstrated –

    then a “declining subsidy” funding model can be implemented. Such a model provides

    non-fee-for-service support initially but converts the support to fee-for-service over


  • The central IT organization should adopt a new attitude about its relationship

    with the businesses:

  • — It should partner with the businesses, actively seeking their involvement in

    key decisions about infrastructure and other enterprise activities. Failure to get

    buy-in results in unnecessary and unproductive conflict.

    — The central IT organization should adopt the “consulting mindset” which would see

    the divisions as clients, not as adversaries.

    — The central IT organization should work with the businesses to develop charge-back

    and investment procedures for paying for IT services. This source of enormous

    conflict can be reduced or eliminated.

  • The central IT organization should rethink charging/funding mechanisms:
  • — It should identify (with the businesses) those services that should fall into the

    traditional charge back model, those services that should be fee-for-service, those

    services that should be non-fee-for-service, and those services that should be funded

    centrally (via some model that puts skin in the game from all sources). Ambiguity

    here must be eliminated.

    — There are special occasions when the enterprise will subsidize business costs, such

    as for major technology refreshes and events like the Year 2000 conversion effort.

    But this funding will come with “strings”: The enterprise will require the divisions

    to comply with certain conditions of acceptance, such as hardware/software asset

    acquisition practices, adherence to standards, and enterprise systems management.

    In Part 3 tomorrow, we’ll cover services, alternative funding mechanisms,

    organizational structure and people.


    lick here to read Part 1 of this three-part column.

    Steve Andriole is the Thomas G. Labrecque Professor of Business at Villanova

    University where he conducts applied research in business and technology alignment. He

    is also the founder & CTO of TechVestCo, a new-economy consortium that focuses on

    optimizing investments in information technology. He can be reached at [email protected].