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Redesign Your IT Organizational Structure

Structure follows strategy: Design your IT organization for the future

  • An organizational redesign represents a critical opportunity to ensure IT is aligned with the strategic direction of the organization.
  • A large variety of approaches and competing priorities make the task of implementing the best-fit organizational design highly complex and difficult to navigate.
  • External competitive influences and leading technological trends further complicate finding the right approach.

Our Advice

Critical Insight

  • Structure is not just your organization chart. Your structure will dictate how roles function and how people work together to create value. It is the key enabler of your strategic direction.
  • Balance adaptability and stability. You need to be able to adapt to change, but have a strategic baseline to assess whether that change fits the bigger picture.
  • Change in practice, not just on paper. Redesign requires constant caring and feeding to see through to the finish line. You role as a champion of change is critical to success.

Impact and Result

  • Define a set of organizational design principles that will act as a manifesto for change, providing a critical checklist so that structure does not devolve from the organization’s strategy.
  • Visualize IT’s structure with a customized operating model, clearly demonstrating how IT creates value and how work flows in and out of the department.
  • Define future-state work units, roles, and responsibilities that will enable the IT organization to complete the work that needs to be done.

Redesign Your IT Organizational Structure

1. Organizational Design Research – A step-by-step document that will provide the baseline needed to balance actionability in the now with adaptability for the future.

While most companies are attempting organizational redesigns to meet their future challenges and adapt to the digital landscape, few are getting it right. Use this blueprint to understand the keys to organizational redesign success, use Info-Tech's methodology to craft a customized operating model as the baseline for your organizational structure, build work units and roles that reflect the target-state organizational operating model, and learn how to effectively communicate your redesign to retain buy-in to follow through on the changes.

2. Organizational Design Communications Deck – A compelling communications template to record the outputs of key activities from the Redesign Your IT Organizational Structure blueprint.

Reorganizations are difficult to get right, and the stakes are high. Follow the methodology outlined in this research set to turn your strategy into action. The final product will result in a comprehensive documentation piece to report outcomes from your restructuring initiative and to address specific concerns from stakeholders or groups of stakeholders.

3. Operating Models and Capability Definition List

Use the IT capabilities definitions and accompanying visualizations to alter and/or customize your organization's operating model to provide full coverage of the capabilities IT is expected to deliver upon.

4. Organizational Design Capability RACI Chart – A structured RACI tool to determine the accountabilities and responsibilities for each work unit across your new organizational structure.

This tool will result in a clear set of duties for each work unit that can then be further divided into roles and their subsequent capability-driven job descriptions.

5. Work Unit Reference Structures

Use the following Visio file for a set of starting-point work structure references that can be customized during the organization’s redesign process.


Member Testimonials

After each Info-Tech experience, we ask our members to quantify the real-time savings, monetary impact, and project improvements our research helped them achieve. See our top member experiences for this blueprint and what our clients have to say.

9.0/10


Overall Impact

$94,466


Average $ Saved

23


Average Days Saved

Client

Experience

Impact

$ Saved

Days Saved

Administrative Tribunals Support Service of Canada

Workshop

10/10

$13,000

20

Hollister Incorporated

Workshop

9/10

$123K

90

SWCA Environmental Consultants

Guided Implementation

9/10

$50,000

20

City of Savannah

Guided Implementation

8/10

N/A

5

Lactalis American Group, Inc

Workshop

9/10

$61,999

20

Peoples Trust

Guided Implementation

10/10

$95,000

47

First Merchants Corporation

Workshop

9/10

$123K

90

Employment Development Department

Workshop

9/10

N/A

N/A

AgVantis Inc

Guided Implementation

10/10

$27,279

9

Town Of Milton

Workshop

8/10

$3,000

5

Western University of Health Sciences

Guided Implementation

10/10

N/A

N/A

Lee County Tax Collector

Workshop

3/10

N/A

2

Bauer Hockey LLC

Workshop

9/10

$61,999

10

City of Lakeland

Guided Implementation

10/10

N/A

50

Horizon Power

Guided Implementation

10/10

N/A

20

Halifax Port Authority

Guided Implementation

10/10

N/A

N/A

MTA Metropolitan Transportation Authority

Guided Implementation

10/10

$58,899

10

Segal

Guided Implementation

9/10

N/A

5

GLY Construction, Inc.

Guided Implementation

8/10

$2,355

2

Debswana

Guided Implementation

9/10

$30,999

9

HighTower

Workshop

9/10

$619K

10

Royal Canadian Mint

Guided Implementation

10/10

$50,000

20

Samaritan Ministries International

Guided Implementation

10/10

$61,999

20

Segal

Guided Implementation

8/10

N/A

10

Dark Fibre Africa

Guided Implementation

10/10

$117K

50

Donor Network West

Guided Implementation

10/10

$123K

20

Choctaw Nation Of Oklahoma

Workshop

10/10

$117K

50

Husco International Incorporated

Guided Implementation

10/10

$2,355

10

Manning & Napier Advisors, LLC

Workshop

9/10

N/A

50

Cross Country Mortgage, Inc.

Guided Implementation

10/10

$12,399

5


IT Organizational Design

Improve performance through a fit-for-purpose organizational design.
This course makes up part of the People & Resources Certificate.

Now Playing: Academy: IT Organizational Design | Executive Brief

An active membership is required to access Info-Tech Academy
  • Course Modules: 5
  • Estimated Completion Time: 2-2.5 hours
  • Featured Analysts:
  • Carlene McCubbin, Sr. Research Manager, CIO Practice
  • James Alexander, SVP of Research and Advisory, CIO Practice

Onsite Workshop: Redesign Your IT Organizational Structure

Onsite workshops offer an easy way to accelerate your project. If you are unable to do the project yourself, and a Guided Implementation isn't enough, we offer low-cost onsite delivery of our project workshops. We take you through every phase of your project and ensure that you have a roadmap in place to complete your project successfully.

Module 1: Decide on Design Principles

The Purpose

  • Craft a set of design principles that are aligned with the organization’s strategic direction and external/internal influencers.

Key Benefits Achieved

  • A set of governing criteria for future organizational structure changes.

Activities

Outputs

1.1

Brainstorm the implications of your IT strategy on your organizational structure.

  • List of points and opportunities for new organizational structure
1.2

Use your collected data to conduct an analysis of current pain points and opportunities.

  • Review of Info-Tech diagnostic data
1.3

Create your finalized list of design principles.

  • List of custom-fit organizational design principles

Module 2: Select Operating Model and Organizational Structure

The Purpose

  • Select an operating model, customize it to meet the nuances of the organization, and land on a baseline organizational sketch.

Key Benefits Achieved

  • Create a custom-fit visualization of the way IT creates value.
  • Define IT’s core capabilities and where they lie within the organization.
  • Land on a baseline organizational sketch to be customized later.

Activities

Outputs

2.1

Finalize your operating model selection.

2.2

Customize the IT operating model.

  • Customized IT operating model
2.3

Decide on a baseline organizational structure.

  • Heat mapped (for gap analysis) IT operating model

Module 3: Customize Organizational Structure

The Purpose

  • Customize the new organizational structure to meet the future-state needs of the organization.

Key Benefits Achieved

  • Newly defined work units.
  • Categorized IT capabilities by work unit.
  • Clear accountabilities and responsibilities for core IT capabilities.

Activities

Outputs

3.1

Customize baseline work units to fit your organization’s future state.

  • Defined future-state work unit structure
3.2

Categorize your IT capabilities within your defined work units.

  • Categorized IT capabilities by work unit
3.3

Delineate accountabilities and responsibilities for your IT capabilities.

  • Capability-based RACI chart

Module 4: Define Roles and Finalize Work Units

The Purpose

  • Finalize the organizational structure by defining future-state roles and work unit mandates.

Key Benefits Achieved

  • Finalized future-state organizational structure.

Activities

Outputs

4.1

Define the roles inside your work units.

  • Future-state role design
4.2

Create a mandate statement for each work unit.

  • Work unit mandates
4.3

Finalize your organizational structure.

  • Finalized organizational structure

Module 5: Build Your Communication Plan

The Purpose

  • Create a communications plan to spread the word of the new organizational structure and retain buy-in from key stakeholders.

Key Benefits Achieved

  • Finalized communications deliverable.
  • Organizational redesign FAQ.

Activities

Outputs

5.1

Conduct a stakeholder analysis to identify the impact and level of resistance from all stakeholders.

  • Stakeholder map
5.2

Create a communications plan tailored to the interests of each of your respective stakeholders.

  • Communications plan
5.3

Create an FAQ to address common questions and concerns around your restructuring.

  • Organizational restructuring FAQ

Redesign Your IT Organizational Structure

Structure follows strategy: Design your IT organization for the future

Our understanding of the problem

This Research Is Designed For:

  • CIOs

This Research Will Help You:

  • Restructure the IT organizational design to be optimized to the IT strategy.
  • Select an appropriate operating model and organizational structure, and customize it to fit your unique organization.
  • Determine future-state roles and responsibilities.
  • Develop an effective communications plan to get buy-in from business and IT stakeholders.

This Research Will Also Assist:

  • IT Leaders

This Research Will Help Them:

  • Become champions of the change, helping to promote the change to other employees.
  • Anticipate employee concerns and plan to mitigate them and gain buy-in.
  • Understand their new roles and responsibilities in the organization.

Executive summary

Situation

  • Organizational design is the alignment of organizational structure, roles, and processes to execute on business strategy – the better aligned the organization is, the more effective it is.
  • For optimal results, the structure of the IT organization must match its strategy, but often IT organizations grow to meet needs of the day and not by strategic design.

Complication

  • Redesigning your IT organization can be highly disruptive, emotional, and politically charged. Effective reorganization efforts need to start with identifying future direction, defining a future operating model, and making difficult decisions about how you will deliver IT services in the future.
  • For organizations that have attempted a reorganization in the last two years, 77% of those have failed (Aronowitz, et al.).

Resolution

This blueprint will walk you through the organizational redesign process, providing a strategic methodology to customize your future-state structure to specific organizational nuances and strategic imperatives, while remaining flexible to future change.

  1. Define a set of organizational design principles that will help to ensure the structure aligns with strategy.
  2. Visualize IT’s structure with a customized operating model, clearly demonstrating how IT creates value and how work flows in and out of the department.
  3. Define future-state work units, roles, and responsibilities that will enable the IT organization to complete the work that needs to be done.
  4. Craft a communications plan that will address key stakeholder concerns and maintain ongoing buy-in for the new structure.

Info-Tech Insight

  1. Structure follows strategy – how your organization is designed will dictate how it behaves. It is the key enabler of your strategic direction.
  2. Focus first on capabilities. Build a forward-looking operating model first – then look to people and roles.
  3. Change in practice, not just on paper. Redesign requires constant caring and feeding to see it through to the finish line.

IT organization design is the means to enabling IT’s strategic direction

What is IT organizational design?

IT organizational design refers to the process of aligning the organization’s structure, processes, metrics, and talent to the organization’s strategic plan to drive efficiency and effectiveness. If your IT strategy is your map, your IT organizational design represents the optimal path to get there.

Why is the right IT organizational design so critical to success today?

Adaptability is at the core of staying competitive today

Digital technology and information transparency are driving organizations to reorganize around customer responsiveness. To remain relevant and competitive, your organizational design must be forward looking and ready to adapt to rapid pivots in technology or customer demand.

Structure is not just an organizational chart

The design of your organization dictates how roles function. If not aligned to the strategic direction, the structure will act as a bungee cord and pull the organization back toward its old strategic direction (Morales Pedraza). Structure supports strategy, but strategy also follows structure.

Organizational design is a never-ending process

Organization design is not a one-time project, but a continuous, dynamic process of organizational self-learning and continuous improvement. Landing on the right operating model will provide a solid foundation to build upon as the organization adapts to new challenges and opportunities.

Organizational design is the mechanism for how you enable your strategy and priorities

The organization’s choice of strategy and the tactics to realize that strategy will have a direct impact on how the internal organization should be organized. This means that you need an iterative process to reassess organizational design at regular intervals. As governance decisions lead to changes in strategic direction, the supporting structures need to be reassessed to ensure they are still aligned.

ORGANIZATIONAL DESIGN

The operating model and architecture for how IT is organized to deliver on business needs and strategies.

IT STRATEGY

The identification of organizational objectives, principles, and tactics necessary to drive business value.

IT GOVERNANCE

A body that has the responsibility and authority for approving strategic direction and monitoring performance.

Many organizations are going through organizational redesigns, but few are getting it right

60% Of companies have attempted an organizational redesign in the last 2 years YET… 77% Of those org designs FAIL.

Source: Aronowitz, et al.

Why is it so difficult to succeed at IT organizational redesign?

  1. Many organizations change the structure on paper, but not in practice. Organizational design efforts are not complete without long-term dedication to creating a shift in culture and practice.
  2. Organizations look to force fit a “trendy” structure. Many organizations attempt to force fit an organizational structure they want to work with rather than picking a structure that enables its strengths and goals or truly will work for their culture.
  3. Restructuring IT impacts much more than IT. Without the right strategic approach, managing the diverse and complex opinions from business stakeholders can prove cumbersome. The redesign process must be as inclusive as possible to parties affected by the change.

86% of IT leaders believe organization and leadership processes are critical, yet the majority struggle to be effective

A double bar graph is presented. One bar is to represent the high importance, the other the high effectiveness in terms of leaders who believe their organization and leadership processes. Gap between importance and effectiveness in terms of organizational design is 45%. Gap between importance and effectiveness in terms of human resources management is 61%. Gap between importance and effectiveness in terms of organizational change management is 55%.

Note: Importance and effectiveness were determined by identifying the percentage of individuals who responded with 8-10/10 to the questions:

  • “How important is this process to the organization’s ability to achieve business and IT goals?”
  • “How effective is this process at helping the organization to achieve business and IT goals?”

Source: Info-Tech Research Group Management and Governance Diagnostic

N=22,800 IT Professionals

The way your organization is built dictates how it will perform. Are you set up for success?

52% of IT organizations self-identify as being in firefighter mode. This means they are focused on resolving urgent or recurring IT issues to achieve short-term gains, rather than spending time on strategic goals.

As a result of this firefighting mentality, most structures today are not consciously built – they’ve arisen organically, unguided by a long-term vision. These Band-Aid solutions can work temporarily, but ultimately organizations end up with structures that are ill equipped to meet the strategic needs of the future.

The design of your IT organization has a significant impact on how it performs. Where you invest in staffing, the level of hierarchy, and the way you manage your relationships with the business have a significant impact on what gets done, when it gets done, how it gets done, and what the business thinks about it.

Every structure decision you make should be based on an identified need, not on a trend. Build your IT organization to enable the priorities of the organization.

Effective organizational design is a competitive advantage. By designing the structure with your business and IT goals in mind, you can build a department that enables these goals – and ensure that you are spending money and resources on the most important things.

Use Info-Tech’s methodology to set yourself up for success

Top factors of organizational design success Increased odds of success How Info-Tech’s methodology addresses these factors:
1. Synchronize design with strategy 5x Your IT strategy will serve as one of the key inputs into crafting a set of organizational design principles that will guide the design of your future-state organizational structure.
2. Clarify roles and responsibilities 6x Conduct a comprehensive RACI chart that will clarify which roles are accountable and responsible for each of your IT capabilities. This will ensure clarity over the way in which work is done, and who needs to collaborate with who.
3. Design layer by layer 4x Start with an operating model, overlay your core IT capabilities, and then structure your organizational sketch based on groupings of those IT capabilities and on the work that needs to be done.
4. Don’t wait for a crisis 21x By using targeted design principles to craft a baseline operating model for the IT organization, it enables you to be proactive and integrative in rationalizing upcoming change and integrating it into your IT organization structure.
Source: The Boston Consulting Group

The following organizational design challenges can be avoided through structured planning

This research is designed to help small to medium-sized organizations across different market segments successfully transform their organizational structure. Assess your fit for this blueprint by considering if the below statements sound familiar:

  • You haven’t actively planned your structure – it just “happened.”
  • Your structure is outdated and the business strategy or goals have changed since the last time a redesign initiative occurred.
  • Your organization is growing and IT cannot keep up.
  • Your CEO is mandating a change in IT.
  • You are experiencing work duplication, role conflict between members of the IT team, and/or inefficiencies.
  • You have noticed that there are high levels of redundancies that are causing delays and a lack of accountability.
  • Your business complains that IT doesn’t understand their needs.
  • You need to add new capabilities into the IT organization.
  • Your business units have highly divergent needs and IT can’t keep up.
  • Your staff is being asked to do work outside of what is in their job descriptions, wasting time on activities that shouldn't be their responsibility.
  • You’re spending too much time on the wrong things.
  • You’re ready to make a transformational change to the way IT functions and performs.

Track the success of your redesign using business metrics

How do I measure the success of my redesign?

The purpose of your IT organizational design is to enable IT to meet its strategic objectives, which are aligned with the larger enterprise’s vision and direction. It is imperative to adapt the key performance indicators (KPIs) that the business is using to track its success and demonstrate how IT can assist the business and improve its ability to reach those targets.

Examples of metrics specific to IT:

  • Percentage of resources dedicated to key capabilities
  • Percentage of resources dedicated to strategic priorities and initiatives
  • Overall business satisfaction with IT

Questions to ask

  1. What are the leading indicators of IT effectively supporting the business’ strategic direction?
  2. How are success metrics aligned with the objectives of other functional groups?

Are your metrics achievable?

S pecific

M easurable

A chievable

R ealistic

T ime-bound

While org design involves the art of the possible, it must be grounded in achievable outcomes. Ensure that the metrics your redesign is measured against reflect realistic and tangible business expectations. Overpromising the impact the organizational design will have can lead to long-term implementation challenges.

Follow Info-Tech’s four-phase approach to building an IT structure that will enable your strategic goals

PHASE 1
Craft Organizational Design Principles and Select an IT Operating Model
PHASE 2
Customize the IT Operating Model
PHASE 3
Architect the Target-State IT Organizational Structure
PHASE 4
Communicate the Benefits of the New Organizational Structure
  • Finalize design principles and goals.
  • Clearly articulate rationale for the change.
  • Select the operating model that will allow you to best meet your goals.
  • Customize your operating model to reflect needs around capabilities, centralization, outsourcing, and priorities.
  • Define your new organizational work units.
  • Build your organizational structure.
  • Define roles and work unit responsibilities and accountabilities.
  • Build work unit mandates and define success metrics.
  • Finalize the new organizational structure.
  • Build the communication plan.
  • Action plan for next steps.

This blueprint is part one of a three-phased approach to organizational transformation

Image is an outline of the three-phased approach to organizational transformation

CIO consolidates disparate IT departments (LoB) into a single outcome-focused organization

CASE STUDY

Industry: Manufacturing

Source: IBM, “A new era begins”

Problem

A Global Fortune 1000 company was seeing an increased need for product innovation, customer service, and speed to market, but they felt they were hindered by IT’s inability to keep up with the pace of change.

Solution

The new CIO established a company-wide operating model for consolidating the disparate IT departments into a single organization focused on outcomes instead of a lines of business organization. 11,000 IT staff were organized into 140 delivery communities, each focused on a specific service area. Communities were led by both the business and IT with shared ownership and responsibility for the results.

Results

When measured three years later, the improvements were considerable. This was largely attributed to the enabling of IT teams to see how their individual roles supported business goals. While challenges were isolated to their service delivery communities, a formalized process that kept IT and the business aligned resulted in high levels of collective innovation, spurring the improvements identified.

30% Reduction in project cycle times

20% Reduction in defect rates

33% Reduction in overall delivery costs

Info-Tech offers various levels of support to best suit your needs

DIY Toolkit

“Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.”

Guided Implementation

“Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.”

Workshop

“We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.”

Consulting

“Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project.”

Diagnostics and consistent frameworks used throughout all four options

Redesign Your IT Organizational Structure

Outline of the structure of the blueprint

Workshop overview

Workshop overview that outlines the activities and the deliverables over the five-day workshop

Contact your account representative or email Workshops@InfoTech.com for more information.

Phase 1

Craft Organizational Design Principles and Select an IT Operating Model

Phase 1: Craft Organizational Design Principles and Select an IT Operating Model

Image has four arrows that represent each phase in the blueprint and the title of each phase. Phase 1 is highlighted.

ACTIVITIES:

  • 1.1 Brainstorm the implications of your IT strategy on your organizational structure
  • 1.2 Use your collected data to conduct an analysis of current pain points and opportunities
  • 1.3 Create your finalized list of design principles
  • 1.4 Weigh your design principles against the list of operating models
  • 1.5 Finalize your operating model selection

OUTCOMES:

  • Collect key data that will inform the way you should structure your future state organization.
  • Create a set of design principles to inform your future decision making around organizational structure changes.
  • Select a baseline operating model that best reflects the way you plan to design your organization.

Any operating model can work – but not every operating model will work for you. Select a future state operating model based on the capabilities you need to deliver as an organization.

An effective organizational design aligns structure with strategy

All aspects of your IT organization’s structure should be designed with the business’ strategic direction in mind. Use the following set of slides to extract the key components of your strategic direction, as well as assess your current organizational pains and opportunities to land on a future structure that aligns with the larger strategic direction.

  1. Review Your IT Strategy: Assess the IT strategy and understand the ways in which IT needs to align with the business objectives for the future.
  2. Design Your Organization: Determine the operating model and organizational chart structure that best suits your needs, then customize it to your specific needs.
  3. Structure Your Organization: Define work roles for your work units and translate role descriptions into jobs with specific competency requirements.
  4. Implement Your Organization Design: Form an implementation team and develop a transition plan (this is a separate research blueprint).

Articulate how IT will support the strategic priorities of the business with a set of organizational design principles

WHAT ARE ORGANIZATIONAL DESIGN PRINCIPLES?

Your organizational design principles should define a set of loose rules that can be used to design your organizational structure to the specific needs of the work that needs to be done. These rules will guide you through the selection of the appropriate operating model that will meet your business needs. There are multiple ways you can hypothetically organize yourself to meet these needs, and the design principles will point you in the direction of which solution is the most appropriate, as well as explain to your stakeholders the rationale behind organizing in a specific way. Data collection on the front end is critical here – one of the number one reasons for organizational design failure is a lack of requisite time spent on the front end understanding what is the best fit.

How to determine your design principles:

  1. Review your IT strategy and digest the organization’s goals, its subsequent implications for the IT organization, and the organization’s target state maturity level.
  2. Conduct an organizational effectiveness assessment to understand what is working and isn’t working in today’s reality with a focus on the future.
  3. Use benchmarking data from Info-Tech’s diagnostic program to gain additional nuance around areas for improvement.

Identify the implications of your IT strategy on your organizational structure

Your IT strategy is a critical input into your future organizational design. Extract critical components of your IT strategy and convert them into a set of actionable design principles that will guide the selection of your IT operating model.

Info-Tech Related Research: Rapidly Develop a Visual IT Strategy

Vision, Mission & Principles

  • Leverage your vision and mission statements that communicate IT’s aspirations and purpose for key information that can be turned into design principles.
  • Review your key IT principles, or if you don’t have any, leverage the IT Vision, Mission, and Guiding Principles Guide to review a set of common IT principles.

Business Goal Implications

  • IT implications are derived from your business goals and will provide important context about the way IT needs to change to meet its overarching objectives.
  • Understand how those implications will change the way that work needs to be done – new capabilities, new roles, new modes of delivery, etc.

Target State IT Maturity

  • Determine your target state IT maturity for your organization using the IT goals that have been uncovered.
  • Refer to the following slide for Info-Tech’s maturity ladder if you have not completed this exercise through the IT strategy blueprint.

Determine the organization’s desired maturity level

DETERMINE:

Where are we today?

Use the following exercise to determine the current overall maturity level of the IT organization.

Where do we want to be as an organization?

Using the inputs from Info-Tech’s diagnostic data to determine where the organization should be after its reorganization.

Image of the Maturity Level

Activity: Brainstorm the implications of your IT strategy on your organizational structure

1.1

Estimated Time: 1 hour

  1. Convene a group meeting with all the key stakeholders involved in your organizational design initiative to review key inputs from your IT strategy.
  2. Review the organizational vision, mission, and principles and extract any important pieces of the organization’s aspirations that need to be highlighted in the organization’s structure. Pay careful attention to issues around customer responsiveness, organizational agility, and core capabilities / competitive differentiators.
  3. Review the organization’s business goals and contextualize their implications for the organizational structure. For example, if an organizational goal is to provide 24/7 support for customers, how does IT need to change to enable this capability?
    • These should directly translate to actionable strategic initiatives for the IT organization to structure around. Document these key strategic initiatives in a list.
    • If you have completed Info-Tech’s IT strategy blueprint, import the results of your IT implications and goals from your finalized IT strategy.
  4. Determine what the necessary organizational maturity level is to deliver your IT goals based on Info-Tech’s Maturity Ladder on the previous slide.
    • Based on your selected maturity level, contextualize what this means in terms of an impact on your organization structure (e.g. What does it mean to be a business partner at XYZ Company?)
    • Create a list of the implications for change that arise from reaching your desired maturity level. These will form critical inputs for your finalized organizational design.

INPUT

  • IT strategy

OUTPUT

  • Implications of IT strategy on future-state organization
  • Target-state maturity level

Document your results in the Organizational Design Communications Deck

Use Info-Tech’s diagnostic program to diagnose specific areas that demand attention

Each of the following Info-Tech diagnostics can provide useful context in outlining what needs to be included in your future organizational structure. Follow the guidance below to extract critical information around your current state, stakeholder needs, and future opportunities for improvement.

Leverage the following Info-Tech Diagnostics:

Leverage the following Info-Tech Diagnostics:
CIO-CEO Alignment
  • Compare CIO and CEO views of IT performance and target role.
  • Review the CEO’s priorities and understand how they align with IT’s goals.
CIO Business Vision
  • Review the organization’s satisfaction with IT’s core services to identify what is important to the business and what areas need improvement.
Management & Governance
  • Identify key processes that need to be improved in the target state organizational structure from the process capability landscape.
IT Staffing Assessment
  • Review your IT staff allocation to identify gaps in coverage.
  • Review the function effectiveness key drivers to assess current performance across the department.

Activity: Use your collected data to conduct an analysis of current pain points and opportunities

1.2

  1. Convene a group meeting with all the key stakeholders involved in your organizational design initiative. Review the results of your strategic implications exercise to understand some of the identified pains and opportunities.
  2. Provide each participant with a marker and stack of sticky notes. Have them openly brainstorm a list of current pain points or inhibitors in the current organizational structure, along with a set of opportunities that can be realized during your restructuring.
  3. As a group, review the sticky notes and group similar topics and themes. Create a high-level label for each of the groupings that can be used for consideration during the crafting of your organizational design principles.

Example of activity 1.2

INPUT

  • Stakeholder feedback
  • Current pain points
  • Identified opportunities

OUTPUT

  • Pain point and opportunity themes

Activity: Create your finalized list of design principles

1.3

  1. As a group, review the key outputs from your data collection exercises and their implications. Group sets of implications that are similar/redundant together.
  2. Prioritize the various implications and build as the starting point for your design principles. Make the list as inclusive as possible to account for all future capabilities and opportunities and to address any existing organizational pains. Translate the implications into design principles by building sentences from the implications – each principle should include the phrase “we will.”
  3. Vote on a finalized list of 8-10 design principles that will guide the selection of your operating model. Have everyone leave the meeting with these design principles so they can review them in more detail with their work units or functional areas and elicit any necessary feedback.
  4. Reconvene the group that was originally gathered to create the list of design principles and make any final amendments to the list as necessary. Use this opportunity to define exactly what each design principle means in the context of your organization so that everyone has the same understanding of what this means moving forward to choosing the right operating model.

INPUT

  • Activity 1.1
  • Activity 1.2

OUTPUT

  • Organizational design principles

Document your results in the Organizational Design Communications Deck

Example Design Principles

Design Principle Description
Decision making We will centralize decision making around the prioritization of projects to ensure that the initiatives driving the most value for the organization as a whole are executed.
Fit for purpose We will build and maintain fit-for-purpose solutions based on business units’ unique needs.
Reduction of duplication We will reduce role and application duplication through centralized management of assets and clearly differentiated roles that allow individuals to focus within key capability areas.
Managed security We will manage security enterprise-wide and implement compliance and security governance policies.
Reuse > buy > build We will maximize reuse of existing assets by developing a centralized application portfolio management function and approach.
Managed data We will create a specialized data office to provide data initiatives with the focus they need to enable our strategy.
Controlled technical diversity We will control the variety of technology platforms we use to allow for increased operability and reduction of costs.
Innovation R&D and innovation are critical – we will build an innovation team into our structure to help us meet our digital agenda.
Resourcing We will separate our project and maintenance activities to ensure each are given the dedicated support they need for success and to reduce the firefighting mentality.
Customer centricity The new structure will be directly aligned with customer needs – we will have dedicated roles around relationship management, requirements, and strategic road mapping for business units.
Interoperability We will strengthen our enterprise architecture practices to best prepare for future mergers and acquisitions.
Cloud services We will move toward hosted vs. on-premises infrastructure solutions, retrain our data center team in cloud best practices, and build roles around effective vendor management, cloud provisioning, and architecture.

Ensure consistency in application of your design principles with a coherent operating model

WHAT IS AN OPERATING MODEL?

An operating model is an abstract visualization, used like an architect’s blueprint, that depicts how structures and resources are aligned and integrated to deliver on the organization’s strategy. It ensures consistency of all elements in the organizational structure through a clear and coherent blueprint before embarking on detailed organizational design. The visual should highlight which capabilities are critical to attaining strategic goals and clearly show the flow of work so that key stakeholders can understand where inputs flow in and outputs flow out of the IT organization.

Example of an operating model

Info-Tech Insight

Investing time in the front end getting the operating model right is critical. This will give you a framework to rationalize future organizational changes, allowing you to be more iterative and your model to change as the business changes.

Weigh the pros and cons between a common set of IT operating models

Use Info-Tech’s set of common operating models to compare and contrast against your organizational design principles. This will allow you to land on a general model that best suits your design principles that you can then customize to support the nuances of your specific IT operating environment.

Model High-Level Description
Plan-Build-Run Model A highly typical IT operating model that focuses on centralized strategic control and oversight in delivering cost-optimized and effective solutions.
Demand-Develop-Supply Model A centralized IT operating model that lends well to more mature operating environments. Aimed at leveraging economies of scale in an end-to-end services delivery model.
LoB/Product Aligned Model A decentralized IT operating model that embeds specific functions within Lines of Business/Product teams and provides cross-organizational support for their initiatives.
Hybrid Functional Model A best of both worlds model, balancing the benefits of centralized and decentralized approaches to achieve both customer responsiveness and economies of scale.
Hybrid Service Model A model that supports what is commonly referred to as a matrix organization, organizing by “tribal” service categories and introducing the role of the service owner.

Each IT operating model is characterized by a variety of advantages and disadvantages

Centralized Hybrid Decentralized
Advantages
  • Maximum flexibility to allocate IT resources across business units.
  • Low-cost delivery model and greatest economies of scale.
  • Control and consistency offers opportunity for technological rationalization and standardization, and volume purchasing at the highest degree.
  • Centralizes processes and services that require consistency across the organization.
  • Decentralizes processes and services that need to be responsive to local market conditions.
  • Eliminates duplication and redundancy by allowing effective use of common resources (e.g. shared services, standardization).
  • Goals are aligned to the distinct business units or functions.
  • Greater flexibility and more timely delivery of services.
  • Development resources are highly knowledgeable about business-unit-specific applications.
  • Business unit has greatest control over IT resources and can set and change priorities as needed.
Disadvantages
  • Less able to respond quickly to local requirements with flexibility.
  • IT can be resistant to change and unwilling to address the unique needs of end users.
  • Business units can be frustrated by perception of lack of control over resources.
  • Development of special business knowledge can be limited.
  • Requires the most disciplined governance structure and the unwavering commitment of the business; therefore, it can be the most difficult to maintain.
  • Requires new processes as pooled resources must be staffed to approved projects.
  • Redundancies, conflicts, and incompatible technologies can result from business units having differentiated services and applications – increasing cost.
  • Ability to share IT resources is low due to lack of common approaches.
  • Lack of integration limits the communication of data between businesses and reduces common reporting.

Decentralization can take many forms – define what it means to your organization

Decentralization can take a few different forms depending on the products that the organization supports and how the organization is geographically distributed. Use the following set of explanations to understand the different types of decentralization possible and when they may make sense for supporting your organizational objectives.

Line of Business Product Line Geographical

Decentralization by line of business (LoB) means that decision-making authority is shared or pushed toward the line of business, reducing the amount of decision making being made by the CIO or IT leadership team.

This form of decentralization is beneficial in settings where each line of business has a distinctive set of products or services that they offer that requires either a specific expertise or where resourcing and strategic direction is retained by that business unit.

Decentralization by product line allows for a more centralized approach to decentralization, whereby related products (similar in technical expertise, technology platform, end-user base, etc.) can be grouped together as a single product line.

By adopting this approach, you can avoid some of the more extreme pitfalls of decentralization and package groups of products in a single product line to find the right balance between flexibility and resource sharing.

Geographical decentralization reflects a shift from centralized decision making to regional decision making based on physical distance.

When teams are in different locations, they can experience several roadblocks to effective communication (e.g. time zones, regulatory differences in different countries) that may necessitate separating those groups in the organizational structure so they have the autonomy needed to make critical decisions.

Centralized Operating Model #1: Plan-Build-Run

An example of a centralized operating model is shown that has the Plan-Build-Run component in it.

Centralized Operating Model #2: Demand-Develop-Service

An example of a centralized operating model is shown that has the demand-develop-service component in it

Decentralized Operating Model: Line of Business, Product, or Geographically Functionally Aligned

An example of a decentralized operating model is shown that has the line of business, product, or geographically-functionally-aligned component.

Hybrid Operating Model #1: Functional/Product Aligned

An example of a hybrid operating model with the functional/product aligned component.

Hybrid Operating Model #2: Product-Aligned Operating Model

An example of a hybrid operating model with the product-aligned-operating component

Hybrid Operating Model #2.5: Service-Aligned Operating Model

An example of a hybrid operating model with the service-aligned-operating component

Activity: Weigh your design principles against the list of operating models

1.4

  1. Import your list of design principles and list them in the first column of a matrix as demonstrated below.
  2. Design Principle Plan-Build-Run Model Demand-Develop-Supply LoB/Product Aligned Hybrid Functional Model Hybrid Service Model
    Design principle 1
    Design principle 2
    Design principle n
  3. Score each of the operating models on a scale of 1-5 in terms of their ability to accommodate your design principle (1 = Low, 3 = Medium, 5 = High).
  4. Design Principle Plan-Build-Run Model Demand-Develop-Supply LoB/Product Aligned Hybrid Functional Model Hybrid Service Model
    Design principle 1 5 5 3 1 3
    Design principle 2 3 3 1 5 3
    Design principle 3 3 1 1 5 3
    Total Score 11 9 5 11 9
  5. Create a shortlist of your top scored models.

Activity: Finalize your operating model selection

1.5

  1. Convene a meeting of your key stakeholders and discuss your shortlisted operating models.
    • Generally discuss the two models and their overall merits and shortcomings. Although the previous quantitative exercise is helpful to remove some of the gut feeling and bias certain stakeholders may have, providing additional qualitative context is critical to making the right decision.
    • Focus on areas where the models differ in their scores respective to your design principles. Gauge the significance of the score difference, considering (a) how critical that design principle is, and (b) what the key structural differences are that account for the difference in score.
  2. Have each stakeholder rank the shortlisted models based on what they consider to be best for the future-state of the organization, taking into consideration the previous group discussion around the shortlisted models.
  3. Use the finalized tally of rank-choice votes to decide on your finalized operating model.
  4. In the Organizational Design Communications Deck, record the chosen operating model and the rationale for choosing that model.

INPUT

  • Organizational design principles
  • Operating model weightings

OUTPUT

  • Finalized operating model selection

Document your results in the Organizational Design Communications Deck

A church’s IT reorganization enabled its continued growth without blowing out infrastructure spending

CASE STUDY

Industry: Not for Profit

Source: The Center for Organizational Design, Area Consolidation project

Problem

  • A church with a rapidly growing membership base aimed to manage its growth without having to massively increase its infrastructure spending.
  • IT planned to combine two proximate area offices into one, consolidating resources, standardizing processes and structure, and reducing costs, while increasing flexibility and customer service to local leaders.

Solution

  • Both offices were combined in a single location, with country service centers created in different countries for support services to be close to local leaders. Departments were also consolidated into functional groups.
  • Core process became streamlined and consolidated where possible and a self-service electronic portal was developed to offer tech support to IT and administrative personnel.
  • The church chose a centralized operating model to meet its needs.

Results

  • Headcount was reduced by 35% and operating costs by $4 million per year.
  • More in-person support to local leaders and flexibility to grow as a result of a more simple and distributed organization.
  • Travel was reduced by 50% due to upgrades in technology services.
  • A better and more responsive service was reported by the local leaders.

Checkpoint: Are you ready to customize your operating model?

Image advising moving on from phase 1 to phase 2

Self-Auditing Guidelines

  • Do you have a solid understanding of the implications of the business goals on the IT organizational structure?
  • Have you landed on a desired organizational maturity level and contextualized what its implications are for organizational change?
  • Do you have a solid understanding of your current organizational inhibitors and the new opportunities presented via reorganization?
  • Have you crafted a set of broad organizational design principles and narrowed them to a finalized list based on stakeholder consensus?
  • Have you scored the alignment between your design principles and the standardized operating models to shortlist which ones best fit your future-state design?
  • Have you conducted a final qualitative analysis of your shortlisted operating models to land on your future-state model?
  • Have you documented your results in the Organizational Design Communications Deck?

If you want additional support, have our analysts guide you through this phase as part of an Info-Tech workshop

Book a workshop with our Info-Tech analysts:

Picture of an Info-Tech analyst
  • To accelerate this project, engage your IT team in an Info-Tech workshop with an Info-Tech analyst team.
  • Info-Tech analysts will join you and your team onsite at your location or welcome you to Info-Tech’s historic Toronto office to participate in an innovative onsite workshop.
  • Contact your account manager (www.infotech.com/account), or email Workshops@InfoTech.com for more information.

The following are sample activities that will be conducted by Info-Tech analysts with your team:

Screenshot of Activity 1.1

Brainstorm the implications of your IT strategy on your organizational structure

Our analyst team will help you analyze your current strategic direction and brainstorm the implications of what this means in terms of impacts on your organizational structure.

Screenshot of Activity 1.2

Use your collected data to conduct an analysis of current pain points and opportunities

Using Info-Tech’s diagnostic data, as well as any other inputs provided, we will help you pinpoint key pains in the current organizational structure and opportunities beyond the current state.

Screenshot of Activity 1.3

Create your finalized list of design principles

Our analysts will help you finalize a list of design principles that will be used as a manifesto going forward to ensure that the future-state organizational structure meets the organization’s strategic needs.

Screenshot of Activity 1.4

Weigh your design principles against the list of operating models

Our analyst team will walk you through creating an analysis matrix to shortlist a set of operating models that best fit your organizational design principles and other organizational nuances/needs.

Screenshot of Activity 1.5

Finalize your operating model selection

We will assist you in conducting one final analysis of the shortlisted operating models to choose the best-fit model to move forward with and customize to the needs of your organization.

Phase 2

Customize the IT Operating Model

Phase 2: Customize the IT Operating Model

Image has four arrows that represent each phase in the blueprint and the title of each phase. Phase 2 is highlighted.

ACTIVITIES:

  • 2.1 Augment your capability overlay to reflect the core capabilities of the IT organization
  • 2.2 Determine the level of centralization in each of your key function areas
  • 2.3 Identify the target state of sourcing for your IT capabilities
  • 2.4 Alter your operating model to reflect your sourcing decisions
  • 2.5 Alter your operating model to reflect your customer-facing capabilities
  • 2.6 Heat map your customized IT operating model

OUTCOMES:

  • Customize your operating model to reflect your core IT capabilities, key decisions around levels of centralization, sourcing strategy, and customer interaction points.
  • Heat map your customized operating model to determine what areas need attention first to reach the target state organizational structure.

Organizational design doesn’t start with people – it starts with capabilities. Know what you need to deliver, how you want to deliver it, and how you want to govern before looking at team structures.

Customize your operating model to visualize how work is done inside your organization

This phase will walk you through the steps needed to customize your operating model so that it reflects how work flows through the IT organization.

Use Info-Tech’s list of core IT capabilities listed on the following slide as a starting point. Augment the capabilities and their illustrations as necessary and overlay them onto your chosen operating model.

Once customized, heat map the IT capabilities inside the operating model to indicate which capabilities are actionable in their current state to enable the target state organizational structure, as well as where critical attention needs to be placed for change.

Steps to customize your operating model

  1. Review Info-Tech’s IT capability overlay and remove capabilities that your organization doesn’t deliver or add capabilities that are missing.
  2. Rationalize the centralization and decentralization of each of your IT capabilities.
  3. Determine the sourcing strategy (insourced/co-sourced/outsourced) for each of your IT capabilities.
  4. Determine which capabilities are customer facing and illustrate their proximity to the customer.
  5. Heat map your IT capabilities based on the ability to act on those capabilities, and their criticality to success.

Refer to the Operating Models and Capability Definition List for descriptions of each of the IT capabilities.

Use the baseline capability overlays as a starting point for your customization efforts

In the Organizational Design Communications Deck, select the baseline capability overlay of the operating model that you chose in Phase 1.

While following the next set of exercises, you will work within the Organizational Design Communications Deck to customize the baseline operating model overlay provided to reflect the nuances of your organization and its strategic direction.

Remember while customizing to consistently refer back to your organizational design principles – these should function as a manifesto going forward that all structural decisions should reference and align with.

Screenshot of <em data-verified=Organizational Design Communications Desk - model 1 Organizational Design Communications Desk - model 2

Download Info-Tech’s Operating Models and Capability Definition List to use while customizing your operating model.

The IT capability overlays are grouped into nine distinct categories

Model of IT Capability and the nine distinct categories. The categories are people & resources, service management & operations, applications, strategy & governance, security & risk, data & business intelligence, infrastructure, PPM & projects, architecture

The baseline overlays use the following set of categorized capabilities as a starting point

Model of the categorized capabilities

Activity: Augment your capability overlay to reflect the core capabilities of your IT organization

2.1

  1. Open the Organizational Design Communications Deck, and select the operating model overlay connected with the operating model baseline selected in Phase 1. Delete the other models from the communication deck.
  2. Using the baseline operating model overlay, walk through each of the IT capabilities and remove any capabilities for which your IT organization is not responsible and/or accountable. Refer to the Operating Model and Capability Definition List for descriptions of each of the IT capabilities.
  3. Augment the language of specific capabilities that you feel are not directly reflective of what is being done within your organizational context, or that you feel need to be changed to reflect more specifically how work is being done in your organization.
    • For example, some organizations may refer to their service desk capability as help desk or regional support. Use a descriptive term that most accurately reflects the terminology used inside the organization today.
  4. Add any core capabilities from your organization that are missing from the provided IT capability list.
    • For example, organizations that leverage DevOps capabilities for their product development may desire to designate this in their operating model.
  5. Document the rationale for decisions made for future reference.

INPUT

  • Baseline list of IT capabilities

OUTPUT

  • Customized list of IT capabilities

Make changes to the operating model in the Organizational Design Communications Deck

Begin to think about how you want to delegate authority in your future-state organization

Decision-Making Authority Span of Control

Decision-making authority refers to the ability to make localized decisions. When work units have localized decision-making power, they can configure resources based on their specific needs. When decision making is left to the top of the hierarchy, the groups will inherently be less responsive but more aligned to central organizational vision and policies.

Where decision-making power lies is largely related to organizational agility. Independence in decision making leads to faster response times to customer demands and trends, as those in contact with the end customer can make decisions without feedback from the CIO/Office of the CIO.

You need to find the balance that is right for your organization that will keep the business satisfied without resulting in undue complexity or unnavigable siloed decision making.

Span of control refers to the individuals that need to be under oversight by a particular governance group. It largely depends on the complexity of tasks being performed and the amount of front-line superior interaction that is required to effectively manage those tasks.

There is no general rule or optimal number for span of control. This is largely dependent on the work that needs to be completed and the interrelatedness of tasks between groups or functions.

When determining the span of control of specific governance functions, think about the nature of work (the more difficult, the narrower the span of control needs to be) and the organizational structures around collaboration (face-to-face means narrow span of control, whereas effective communication platforms and structures permit a wider span of control).

Info-Tech Insight

Think of impersonal relationships from a role-to-role, not a person-to-person perspective. You will run the risk of biases in your structure by current competency levels if you take an individual-centric approach.

Rationalize the level of centralization in your different work units

Your departmental level of centralization/decentralization is largely guided by your chosen operating model in Phase 1, but it is still important to rationalize specific work units/functional areas of your IT organization to see if it would better suit the organization to treat them as centralized or decentralized entities.

Ultimately, there is no right answer for how to structure each of these areas. Weigh the benefits and disadvantages and land on what fits the larger organizational structure and culture of the organization.

From there, make the necessary changes to the operating model so the degree of centralization is reflected in the visualization. Decentralized capabilities will be visualized as redundancies across function areas, whereas centralized capabilities will only be visualized once.

Example of model on rationalize the level of centralization in your different units.

For more context around specific functional areas, please refer to Appendix A: Centralization / Decentralization Models.

Rationalize the level of centralization in your different work units (continued)

Strike the right balance between responsiveness and cost effectiveness by weighing the following key considerations for centralization and decentralization.

Centralization Decentralization
Key Points of Consideration:
  • Centralization gives better oversight over resource allocation and distribution and can make routine tasks easier.
  • Centralization offers opportunities for cost savings by avoiding the need for redundancies in skills and technology across different groups.
  • Centralized groups can produce economies of scale for highly in-demand services.
  • Centralization can assist with providing better security and data governance by providing a central oversight over data on the organization’s servers and networks.
  • Centralization can slow things down by creating bottlenecks or dependencies within larger group settings.
Key Points of Consideration:
  • Decentralization provides autonomy to work within organizational standards and boundaries to be innovative in the way tasks are completed.
  • Decentralization can increase the agility and responsiveness to customer demands, allowing groups to be in tune with the business and more tightly aligned with their goals and objectives.
  • Decentralization encourages a sense of ownership and cooperative management, driving trust and accountability in employees.
  • Decentralization can lead to information silos as knowledge sharing and tasks are conducted at a local level and are not guided by department-wide structures and policies.

Activity: Determine the level of centralization in each of your key function areas

2.2

Estimated Time: 2 hours

  1. Using your operating model, rationalize how much centralization or decentralization is necessary in each of your functional areas and the factors you would decentralize around. Consider the following:
    • What does decentralization mean in your organization? Is it geographic, by functional area, or by product/product family?
    • How much autonomy and flexibility does that group need to complete their day-to-day tasks? The more autonomy needed by a group, the higher degree of decentralization is necessary for decision making.
    • How complex are the tasks being completed? The more complex, the higher degree of centralization is necessary for coordination.
    • Determine and document what the decentralized grouping areas will be (i.e. geographic groupings).
  2. Alter your operating model where necessary to reflect changes to your desired levels of centralization/decentralization.
    • Review each capability and definition and alter where certain capabilities sit within the operating model to reflect their level of centralization or decentralization.
      • Centralized functions should move toward depiction as a single capability placed in a centralized functional area.
      • Decentralized capabilities should be depicted as redundant across multiple decentralized functional areas to reflect their existence in multiple areas.
  3. Document the rationale for decisions made for future reference.

INPUT

  • List of customized IT capabilities

OUTPUT

  • Centralization/ decentralization determination for each IT capability

Make changes to the operating model in the Organizational Design Communications Deck

Weigh which sourcing model(s) will best align with the needed capabilities to deliver effectively

Model of weighing which sourcing models will best align with the needed capabilities

Evaluate your IT capabilities using the following sourcing criteria

Leverage the following criteria to rationalize the sourcing strategy for each of your future state organizational design capabilities. Ensure that while you are rationalizing each capability, you maintain a holistic perspective of what will work best as a collective effort in realizing IT’s strategic direction.

Sourcing Criteria Description
1. Critical or commodity* Determine whether the component to be sourced is critical to your organization or if it is a commodity. Commodity components, which are either not strategic in nature or related to planning functions, are likely candidates for outsourcing.
2. Readiness to outsource* Identify how easy it would be to outsource a particular IT component. Consider factors such as knowledge transfer, workforce reassignment or reduction, and level of integration with other components.
3. In-house capabilities* Determine if you have the capability to deliver the IT solutions in-house. This will help you establish how easy it would be to insource an IT component.
4. Cost Consider the total cost (investment and ongoing costs) of the delivery of the IT component for each of the potential sourcing models for a component.
5. Quality Define the potential impact on the quality of the IT component being sourced by the possible sourcing models.
6. Compliance Determine whether the sourcing model would fit with regulations in your industry. For example, a healthcare provider would only go for a cloud option if that provider were HIPAA compliant.
7. Security Identify the extent to which each sourcing option would leave your organization open to security threats.
8. Flexibility Determine the extent to which the sourcing model will allow your organization to scale up or down as demand changes.

*The first three factors to consider will be applied to each of the components of the focus areas. The other factors will be used to evaluate the appropriateness of each sourcing model.

Activity: Identify the target state of sourcing for your IT capabilities

2.3

Estimated Time: 3 hours

  1. Apply the sourcing model selection criteria to the IT capabilities within your operating model.
    • On a scale of 1–5, determine each capability from your IT operating model’s business criticality, readiness to outsource, and the in-house capabilities.
    IT Capability Business Criticality Readiness to Outsource In-House Capabilities
    Requirements Gathering 5 2 2
    Project Management 3 4 2
    Planning 1 2 5
  2. Using the sourcing criteria from the previous slide, evaluate each specific sourcing model on a scale of 1-5.
  3. IT Capability Sourcing Models Cost (25%) Flexibility (20%) Quality (55%) Total (100%) Best-Fit Model
    Requirements Gathering Insource/Co-source/Outsource 3/2/4 5/3/1 3/4/2 3.4/3.3/2.3 Insource
    Project Management Insource/Co-source/Outsource 2/3/5 5/3/1 2/3/5 2.6/3/4.2 Outsource
    Disaster Recovery Planning Insource/Co-source/Outsource 4/4/1 5/4/3 1/2/5 2.55/2.9/3.6 Outsource
  4. Weigh your sourcing model options against each other and decide what best fits the organization’s future state.

INPUT

  • Customized IT capabilities

OUTPUT

  • Sourcing strategy for each IT capability

Activity: Identify the target state of sourcing for your IT capabilities (continued)

Model of identify the target state of sourcing for your IT capabilities

Activity: Alter your operating model to reflect your sourcing decisions

2.4

  1. Based on the results of your identification of target state sourcing, move the capabilities that you have decided to outsource to a new box in the operating model located under the input arrow for “External Service Providers.”
  2. Sub-divide the external service providers box as necessary to reflect lines of division for who will manage the external providers.
    • For instance, in the example below, the applications-related capabilities are delineated with a dotted line and an arrow that would point to the functional area of the organization that would be responsible for the management of those capabilities.

Example model of activity 2.4

INPUT

  • Sourcing strategy for each IT capability

OUTPUT

  • Altered operating model to reflect sourcing strategy

Make changes to the operating model in the Organizational Design Communications Deck

Designate the capabilities that will interface with the customer

Finish customizing your IT operating model by delineating a line between the IT capabilities that interface with the customer and the IT capabilities that do not. This helps to visualize the points of collaboration between IT and the business and communicate which capabilities within each functional area/work unit of the organization are responsible for eliciting the business’ opinions/feedback in the process of solution/service delivery.

While certain work units will interface with the business, not all the underlying capabilities will be a part of this interaction. It is important to visualize which capabilities will be customer facing, so that when socialized with the business, they are clear in terms of where they communicate to provide feedback and illicit end-user services.

Example model that includes the line between IT capabilities that will and will not interface with the customer

Activity: (optional) Alter your operating model to reflect your customer-facing capabilities

2.5

Estimated Time: 2 hours

  1. Start by determining which of your IT capabilities are customer/end-user facing. Typical capabilities that are considered customer facing include stakeholder relations, service desk, requirements gathering, project management, etc. Ensure you consider your customized or altered capabilities from Exercise 2.1.
  2. Move the capabilities that are customer facing nearest to the customer input arrow.
  3. Separate your customer-facing capabilities from your non-customer-facing capabilities with a dotted line. Refer to the previous slide for an example of what this looks like.
  4. Review the output of this exercise and consider if there is enough customer-facing functionality within IT to make it accessible for both planning purposes and product/service feedback. If not, rationalize which capabilities should be considered customer facing to elicit the appropriate amount of information from the business.

INPUT

  • In progress customized operating model

OUTPUT

  • Finalized operating model

Activity: Heat map your customized IT operating model

2.6

  1. At this point, you should have a completed capability view of your operating model in terms of what capabilities you need to have, the degree of centralization, and sourcing planning.
  2. Convene a group of the key stakeholders involved in the IT organizational design initiative.
  3. Review your operating model overlaid with IT capabilities and color each capability according to the organization’s ability to act upon that capability now, creating a heat map. Green indicates current ability to act, yellow indicates desired future state, and red indicates that there are no desired capabilities for that specific intersection.
  4. Review your heat map and highlight the capabilities that are deemed most critical to enable the new organizational structure. Mark these with a black circle to indicate their importance moving forward.

INPUT

  • Customized operating model

OUTPUT

  • Heat mapped operating model

Make changes to the operating model in the Organizational Design Communications Deck

Heat Mapped Operating Model Example

Heat Mapped Operating Model Example

University of Alabama at Birmingham saved $2-3M annually by centralizing infrastructure to reduce redundancies

CASE STUDY

Industry: Higher Ed

Source: Higher Ed Increasing IT Organizational Effectiveness, University of Alabama at Birmingham

Problem

  • The ad hoc growth of the IT department and the highly distributed IT service delivery and management environment have led to many duplications of services and a lack of both standardized processes and visibility into enterprise-wide IT activity.
  • University leadership perceived this environment as both high risk and inefficient. They set out to improve IT operations and better align the IT organization to the strategic aims of the university.

Solution

  • They interviewed IT leadership and staff, as well as distributed an IT skills and activity survey to all 400 IT staff in order to develop an accurate understanding of the current state and to identify areas for enhancement (i.e. future state).
  • They then developed a model, and a central IT organizational structure based on that model, that centralized resources for commodity IT services while preserving mission-specific services in local units.
  • A 90-day transition plan was developed and implemented.

Results

  • $2-3 million in annual savings due to a centralized infrastructure environment that reduces redundancy and management complexities.
  • The current state assessment gave insight into the challenges and gaps that existed while the future state design leveraged the organization’s strengths in developing a model that balanced high-quality services with operating securely and efficiently.

Checkpoint: Are you ready to create your organizational sketch?

Image advising moving on from phase 1 to phase 2

Self-Auditing Guidelines

  • Have you augmented your list of IT capabilities to accurately reflect your future-state organizational structure?
  • Have you rationalized the level of centralization for each of your IT capabilities and edited your operating model accordingly?
  • Have you decided the sourcing strategy for each of your IT capabilities and migrated any outsourced capabilities below external service providers?
  • Have you delineated between your customer-facing and non-customer-facing capabilities to clarify points of interaction with the customer?
  • Have you heat mapped your operating model based on your ability to deliver on each IT capability in the target state organizational structure?
  • Have you shortlisted the highest priority capabilities on your heat map that need the most immediate attention?
  • Have you documented your results in the Organizational Design Communications Deck?

If you want additional support, have our analyst guide you through this phase as part of an Info-Tech workshop

Book a workshop with our Info-Tech analysts:

Picture of Info-Tech analyst

  • To accelerate this project, engage your IT team in an Info-Tech workshop with an Info-Tech analyst team.
  • Info-Tech analysts will join you and your team onsite at your location or welcome you to Info-Tech’s historic Toronto office to participate in an innovative onsite workshop.
  • Contact your account manager (www.infotech.com/account), or email Workshops@InfoTech.com for more information.

The following are sample activities that will be conducted by Info-Tech analysts with your team:

Screenshot of activity 2.1

Augment your capability overlay to reflect the core capabilities of your IT organization

Our analyst team will help you customize Info-Tech’s list of baseline IT capabilities to ensure that your new organizational structure has full coverage over the work IT needs to complete.

Screenshot of activity 2.2

Determine the level of centralization in each of your key function areas

Our analyst team will assist you in determining which capabilities need to be centralized/decentralized in your IT department and help you alter your operating model to reflect this decision-making process.

Screenshot of activity 2.3

Identify the target state of sourcing for your IT capabilities

Our analysts will walk you through a cost-benefit calculation of centralizing/decentralizing your IT capabilities to land on whether they are best insourced, outsourced, or co-sourced.

Screenshot of activity 2.4

Alter your operating model to reflect your sourcing decisions

Our analyst team will help you alter your operating model to reflect your sourcing decisions, moving outsourced and co-sourced functions to their own area of the operating model.

Screenshot of activity 2.5

Alter your operating model to reflect your customer-facing capabilities

Our analyst team will help you determine which IT capabilities need to be customer-facing and alter the operating model to ensure these relationships are clear to any business stakeholders who view the IT operating model.

Screenshot of activity 2.6

Heat map your customized IT operating model

With your customized IT operating model in hand, our analyst team will walk you through a heat-mapping exercise that will identify current gaps in capability and the highest priority items for your organization going forward.

Phase 3

Architect the Target-State IT Organizational Structure

Phase 3: Architect the Target-State IT Organizational Structure

Image has four arrows that represent each phase in the blueprint and the title of each phase. Phase 3 is highlighted.

ACTIVITIES:

  • 3.1 Categorize your IT capabilities within your defined work units
  • 3.2 Delineate accountabilities and responsibilities for each of your IT capability sub-practices
  • 3.3 Use the Organizational Design Capability RACI Chart to delineate responsibilities for each of your IT capability sub-practices
  • 3.4 Create a mandate statement for each work unit
  • 3.5 Finalize your organizational structure

OUTCOMES:

  • Conduct a RACI to determine the accountabilities and responsibilities for delivering on IT’s capabilities
  • Define the role(s) within each work unit
  • Create work unit mandates that communicate the intended function of each work unit
  • Finalize your organizational structure

Make change in practice, not just on paper, by clearly defining how you will execute on key activities across the organization. How you want to operate should help you define what roles you will need as a result.

Use a top-down approach to build your target state IT organizational sketch

The organizational sketch is the outline of the organization that encompasses the work units and depicts the relationships among them. It’s important that you create the structure that’s right for your organization, not one that simply fits with your current staff’s skills and knowledge. This is why Info-Tech encourages you to use your operating model as a mode of guidance for structuring your future-state organizational sketch.

The organizational sketch is made up of unique work units. Work units are the foundational building blocks on which you will define the work that IT needs to get done. To build your work units, use the baseline organizational sketches provided as a starting point and customize as necessary. This will not match your operating model one to one, as certain functional areas will need to be broken down into smaller work units to ensure appropriate leadership and span of control.

Once you have completed the organizational sketch, defined key roles, and gotten initial approval, you can then staff the positions and complete an additional review of the design to ensure a cultural and political fit, including that the span of control is right for the organization.

Use your customized operating model to build your work units

WHAT ARE WORK UNITS?

A work unit is a functional group or division that has a discrete set of processes or capabilities that it is responsible for, which don’t overlap with any others. Your customized list of IT capabilities will form the building blocks of your work units. Step one in the process of building your structure is grouping IT capabilities together that are similar, or that need to be done in concert in the case of more complex work products. The second step is to iterate on these work units based on the organizational design principles from Phase 1 to ensure that the future-state structure is aligned with enablement of the organization’s objectives.

Example Work Units

Here is a list of typical work units you can use to brainstorm what your organization’s should look like. Some of these overlap in functionality but should provide a strong starting point and hint at some potential alternatives to your current way of organizing.

  • Office of the CIO
  • Strategy and Architecture
  • Architecture and Design
  • Business Relationship Management
  • Projection and Portfolio Management
  • Solution Development
  • Solution Delivery
  • DevOps
  • Infrastructure and Operations
  • Enterprise Information Security
  • Security, Risk & Compliance
  • Data and Analytics

Download Info-Tech’s Work Unit Reference Structures to use while defining your work units.

Iterate initial work unit groupings by considering how they address the following criteria

The following criteria are a common set of guidelines by which a structure takes shape. These principles determine, among other things, the levels of hierarchy in your structure, the level of focus you give to processes, and where power is dispersed within your organizational design. Use this as a basis to complete your first iteration of the work units.

Criteria Description of Impact
Prioritization High-priority processes often require more attention, have more work, or are more visible. When you have multiple high-priority capabilities in one work unit, do a sanity check to determine whether it’s realistic for one work unit to be responsible for all those capabilities.
Effectiveness Review each work unit and consider the level of effectiveness of each process. Having multiple low effectiveness processes isn’t necessarily an issue unless they are coupled with multiple high-priority processes. If this is the case, you may want to consider separating the work units.
Specialization The degree of specialization determines the scope of the roles within your organization. If a work unit requires a significant amount of specialized knowledge, determine whether you’ll be able to find a director with that level of specialization in all the areas and consider redistributing.

Activity: Categorize your IT capabilities within your defined work units

3.1

Estimated Time: 1 hour

  1. Using a whiteboard or large tabletop, list each capability from your operating model on a sticky note and recreate your operating model. Use one color for centralized activities and a second color for decentralized activities.
  2. With the group of key IT stakeholders, review the operating model and any important definitions and rationale for decisions made.
  3. Starting with your centralized capabilities, review each in turn and begin to form logical groups of compatible capabilities. Review the decentralized capabilities and repeat the process, writing additional sticky notes for capabilities that will be repeated in decentralized units.
  4. Note: Not all capabilities need to be grouped. If you believe that a capability is a high enough priority, has a lot of work, or is significantly divergent from others, put this capability by itself.

  5. Define a working title for each new work unit, and discuss the pros and cons of the model. Ensure the work units still align with the operating model and make any changes to the operating model needed.
  6. Review your design principles and ensure that they are aligned with your new work units.

INPUT

  • Organizational business objectives
  • Operating model

OUTPUT

  • Defined work units

Document in the Organizational Design Communications Deck and the Organizational Design Capability RACI Chart

Work Unit Example

Work unit example

3.1 Example

Use the Org Design Capability RACI Chart to delineate responsibilities for each of your IT capability sub-practices

3.2 Organizational Design Capability RACI Chart

Purpose

Define the accountabilities and responsibilities for your defined work units.

Steps

  1. Open the Organizational Design Capability RACI Chart, and begin by entering the names of your newly identified work units on the Data Entry tab.
  2. On the Capability Analysis tab, review the definitions and document the decisions made around the level of priority of the capabilities, and which work unit owns the capability from your previous exercise.
  3. On the Wk. Unit Capability Ownership tab, review all of the activities listed, and remove any activities that your organization will not complete.
  4. For each work unit, identify at the activity level which work unit is accountable and/or responsible for each activity by entering an A, A/R, or R. Remember only one work unit can be accountable for an activity; this is the group that is ultimately accountable for its success. Multiple work units can be responsible, this means that multiple groups may actively be executing the work related to that responsibility.

INFO-TECH DELIVERABLE

Organizational Design Capability RACI Chart Screenshot of Info-Tech's <em data-verified=Organizational Design Capability RACI Chart

Create mandates for each of your identified work units

WHAT ARE WORK UNIT MANDATES?

The work unit mandate should provide a quick overview of the work unit and be clear enough that any reader can understand why the work unit exists, what it does, and what it is accountable for. Each mandate should be distinguishable enough from your other work units to make it clear why the work is grouped in this specific way, rather than an alternative option.

Each work unit will have a unique mandate. The mandate will vary by organization based on the agreed upon work units, design archetype, and priorities. Don’t just adopt an example mandate from another organization or continue use of the organization’s pre-existing mandate – take the time to ensure it accurately depicts what that group is doing so that its value-added activities are clear to the larger organization.

Example Work Unit Mandates

  • The Office of the CIO will be a strategic enabler of the IT organization, driving IT organizational performance through improved IT management and governance. A central priority of the Office of the CIO is to ensure that IT is able to respond to evolving environments and challenges through strategic foresight and a centralized view of what is best for the organization.
  • The Project Management Office will provide standardized and effective project management practices across the IT landscape, including an identified project management methodology, tools and resources, project prioritization, and all steps from project initiation through to evaluation, as well as education and development for project managers across IT.
  • The Solutions Development Group will be responsible for the high-quality development and delivery of new solutions and improvements, and production of customized business reports. Through this function, IT will have improved agility to respond to new initiatives and will be able to deliver high-quality services and insights in a consistent manner.

Create a mandate statement for each work unit

3.3

Estimated Time: 4 hours

  1. Assign each team an equal or close to equal number of work units.
  2. As a team, review the work unit’s responsibilities and brainstorm keywords to describe the unique role that the working unit will play. (Consider value, responsibility, decisions, and authority.)
  3. Using these keywords, come up with a set of statements that describe the overall purpose of that working group. Have each group present their work unit mandates and make changes wherever necessary.

INPUT

  • List of work units
  • RACI
  • Defined roles

OUTPUT

  • Work unit mandates

Document in the Organizational Design Communications Deck

Identify the key roles and responsibilities for the target IT organization

Now that you have identified the main units of work in the target IT organization, it is time to identify the roles that will perform that work. At the end of this step, the key roles will be identified, the purpose statement will be built, and accountability and responsibility for roles will be clearly defined. Make sure that accountability for each task is assigned to one role only. If there are challenges with a role, change the role to address them (e.g. split roles or shift responsibilities).

Model of identifying the roles that will perform the work

Info-Tech Insight

Do not bias your role design by focusing on your existing staff’s competencies. Remove the individuals from the roles and design them in a way that will best enable the organization’s objectives to be met. If you begin to focus on your existing team members, you run the risk of artificially narrowing the scope of work or skewing the responsibilities of individuals based on the way it is, rather than the way it should be.

Activity: Define the roles inside your work units

3.4

  1. Select a work unit from the organizational sketch.
  2. Print a copy of the responsibilities and accountabilities of each work unit, from the Organizational Design Capability RACI Chart. Review each of the IT capability activities and responsibilities for which the work unit is responsible and:
    • Describe the most senior role in that work unit by asking, “what would the leader of this group be responsible for?” Create a purpose statement for the leader to describe this.
    • Review the list of accountabilities and responsibilities, and begin to start grouping like activities together by designing one role at a time, and tagging like responsibilities that you believe could be successfully grouped into one job.
    • Continue until key roles are identified and role profiles have been completed.
  3. Fill a role profile (template on the following slide) for each of your organizational roles to summarize each role’s working name, purpose, accountabilities, and responsibilities.

INPUT

  • Work unit accountabilities and responsibilities

OUTPUT

  • Target-state roles

Sample role profile (partially complete)

Example of a role profile that is partially complete

Activity: Finalize your organizational structure

3.5

  1. Import each of your work units and the target-state roles that were identified for each.
  2. In the place of the name of each work unit in your organizational sketch, replace the work unit name with the prospective role name for the leader of that group.
  3. Example of activity 2.5 step 2
  4. Under each of the leadership roles, import the names of team members that were part of each respective work unit.
  5. Example of activity 2.5 step 3
  6. Validate the final structure as a group to ensure each of the work units includes all the necessary roles and responsibilities and that there is clear delineation of accountabilities between the work units.

INPUT

  • Activity 3.1 to 3.5

OUTPUT

  • Finalized organizational structure/sketch

Document in the Organizational Design Communications Deck

A government agency put RACI-driven accountability at the forefront of its organizational restructuring initiative

CASE STUDY

Industry: Government

Source: Master the Matrix Blog

Challenge

A government agency was presented with the challenge of overseeing the operations of over 200 organizations with a staff of 50 employees.

They were presented with several key challenges:

  • Many longstanding employees may have been resistant to change
  • Need to streamline reporting structures
  • Need for adaptability to strategic planning revisions every 2-4 years in line with changes in government policy

Solution

The agency undertook an organizational redesign process that would meet government directives while streamlining organizational performance and its information systems.

The organization realized that a top-down reorganization of roles was necessary not only to meet needs, but also to overcome any internal resistance to change that may come from the initiative.

Part of their methodology was to conduct a detailed RACI matrix to account for all actions and processes and promote a culture of transparency and inclusion.

Results

By approaching this challenge with role design and responsibility clarity front-and-center in the organizational redesign strategy, they were able to provide a solid foundation that enables the long-term changes to implement their strategic direction.

Key success highlights included:

  • RACI matrix driving new job descriptions
  • Buy-in from all levels of the organization due to the transparency of the process
  • Team members begin to feel like they are part of the solution, not part of the problem

Checkpoint: Are you ready to develop a communications plan for your future-state organizational structure?

Image advising moving on from phase 3 to phase 4

Self-Auditing Guidelines

  • Have you altered the baseline work units to reflect your customized operating model?
  • Have you taken your customized list of IT capabilities from Phase 2 and categorized them within your selected work units?
  • Have you determined the key accountabilities and responsibilities by work unit for each of your subdivided IT capabilities?
  • Have you defined the roles within each of the work units that will perform the accountabilities and responsibilities delineated during your RACI exercise?
  • Have you created a set of work unit mandates that communicate the value that each unit provides and that differentiate from IT’s other functionalities?
  • Have you documented your results in the Organizational Design Communications Deck?

If you want additional support, have our analysts guide you through this phase as part of an Info-Tech workshop

Book a workshop with our Ifo-Tech analysts:

Picture of Info-Tech analyst

  • To accelerate this project, engage your IT team in an Info-Tech workshop with an Info-Tech analyst team.
  • Info-Tech analysts will join you and your team onsite at your location or welcome you to Info-Tech’s historic Toronto office to participate in an innovative onsite workshop.
  • Contact your account manager (www.infotech.com/account), or email Workshops@InfoTech.com for more information.

The following are sample activities that will be conducted by Info-Tech analysts with your team:

Screenshot of activity 3.1

Categorize your IT capabilities within your defined work units

Our analyst team will assist you in distributing your IT capabilities into the defined work units to ensure full coverage and that each work unit has a rational amount of work to complete.

Screenshot of activity 3.2

Delineate accountabilities and responsibilities for your IT capabilities

Our analysts will walk you through a RACI exercise that will determine the work unit-based accountabilities and responsibilities for each of your IT capabilities.

Screenshot of activity 3.3

Define the roles inside your work units

Our analyst team will help you define the roles within your work units and distribute the accountabilities and responsibilities from your RACI across the roles within each work unit.

Screenshot of activity 3.4

Create a mandate statement for each work unit

Our analyst team will help you craft a mandate statement for each work unit that will communicate how each unit creates value and how it is differentiated from IT’s other value-creating areas. This will provide clarity in business terms of how IT completes its work.

Screenshot of activity 3.5

Finalize your organizational structure

Our analyst team will help you translate your new work units and target-state roles and responsibilities into a sketch of the organization’s hierarchy. This will provide a visual look at how work will be delegated in the new structure.

Phase 4

Communicate the Benefits of the New Organizational Structure

Phase 4: Communicate the Benefits of the New Organization Structure

Image has four arrows that represent each phase in the blueprint and the title of each phase. Phase 4 is highlighted.

ACTIVITIES:

  • 4.1 Conduct a stakeholder analysis to identify the impact and level of resistance from all stakeholders
  • 4.2 Create a communications plan tailored to the interests of each of your respective stakeholders
  • 4.3 Create an FAQ to address common questions and concerns around your restructuring
  • 4.4 Finalize your Organizational Design Communications Deck by summarizing your vision and key design principles

OUTCOMES:

  • A communication strategy tailored to all relevant stakeholders
  • A frequently asked questions list that will allow proactive addressing of concerns and address common questions from impacted stakeholders.
  • A finalized organizational design deliverable that includes all activities completed in this blueprint.

Don’t wait to get buy-in. Now that you have your target organizational structure, involve your IT team in refining the model for optimal results, and answer questions openly and honestly whenever possible.

Make a plan to effectively manage and communicate the change

Success of your new organizational structure hinges on adequate preparation and effective communication. The top challenge facing organizations in completing the organizational redesign is their organizational culture and acceptance of change. Effective planning for the implementation and communication throughout the change is pivotal. Make sure you understand how the change will impact staff and create tailored plans for communication.

Image of circle graph that lists and shows the key challenges for CIOs completing organizational design

Activity: Conduct a stakeholder analysis to identify the impact and level of resistance from all stakeholders

4.1

  1. Through discussion, generate a complete list of stakeholders for requirements gathering and record the names on the whiteboard / flip chart. Group related stakeholders together.
  2. Using the template on the right, draw the stakeholder power map.
  3. Evaluate each stakeholder on the list based on:
    • Influence: To what degree can this stakeholder impact progress?
    • Involvement: How involved is the stakeholder in this already?
    • Support: Label supporters with green sticky notes, resisters with red notes, and the rest with a third color.
  4. Based on the assessment, write the stakeholder’s name on a green, red, or other colored sticky note, and place the sticky note in the appropriate place on the power map.
Example of activity 4.1

Stakeholders with high influence who are not as involved in the project or are heavily impacted by the project are less likely to give feedback throughout the project lifecycle and need to be engaged. They are not as involved, but can impact project success, so stay one step ahead. Do not limit your engagement to kick-off and close – you need to continue seeking input and support at all stages of the project.

Key players have high influence but are also more involved with the project or impacted by its outcomes and are thus easier to engage. Stakeholders who are heavily impacted by project outcomes will be essential to your organizational change management strategy. Do not wait until implementation to engage them in preparing the organization to accept the project – make them change champions.

Stakeholders with low influence who are not impacted by the project do not pose a significant risk, but you need to keep them consistently informed of the project and involve them at the appropriate control points to collect feedback and approval.

Communicate reasons for organizational structure changes and how they will be implemented

Leaders of successful change spend considerable time developing a powerful change message, i.e. a compelling narrative that articulates the desired end state, and that makes the change concrete and meaningful to staff.

The organizational change message should:

  • Explain why the change is needed.
  • Summarize what will stay the same.
  • Highlight what will be left behind.
  • Emphasize what is being changed.
  • Explain how change will be implemented.
  • Address how change will affect various roles in the organization.
  • Discuss the staff’s role in making the change successful.
Model of the five elements of communicating change.
Source: The Qualities of Leadership: Leading Change

Hold key meetings with staff to explain the changes and reasoning behind them

It’s important to level set the change and initiatives through a kick-off meeting with your staff. During this meeting, use Info-Tech’s Organizational Design Communications Deck to communicate the changes.

It’s important to set the mood appropriately. If the change involves lay-offs, don’t throw a party. Know your staff and the message you are trying to convey first.

For the kick-off, Info-Tech recommends that you meet one-on-one with key stakeholders prior to the kick-off. Those stakeholders will be the management team, roles that are being significantly changed, and anyone who you identified as a dissenter in your stakeholder analysis. Don’t have these individuals hear this information for the first time in a group setting.

One-on-ones with key stakeholders Reorganization kick-off meeting Work unit meetings
Reasoning: Don’t blindside employees with the changes in the group meetings.
  • High-level explanation of the change and the reasons behind it.
  • Detailed explanation of their role within the organization – and detailed explanation of the changes in their role.
  • Question and answer period.
  • Detailed explanation of their work unit structure.
Reasoning: Make sure everyone is given the same information and understands how it fits together.
  • Detailed explanation of the change – covering full communication details.
  • Detailed explanation of the structure.
  • Detailed explanation of the work unit responsibilities and reporting structure.
  • Question and answer period.
Reasoning: Allow team members to get to know each other and their new manager and level set expectations.
  • Detailed explanation of the change to the specific work unit.
  • Detailed explanation of the work unit mandate, responsibilities, and roles.
  • Detailed explanation of the work unit reporting structure and metrics.
  • Question and answer period.

Apply the following communication principles to make your IT organization redesign changes relevant to stakeholders

Be Consistent

  • The core message must be consistent regardless of audience, channel, or medium.
  • Test your communication with your team or colleagues to obtain feedback before delivering to a broader audience.
  • A lack of consistency can be interpreted as an attempt at deception. This can hurt credibility and trust.

Be Clear

  • Say what you mean and mean what you say.
  • Choice of language is important: “Do you think this is a good idea? I think we could really benefit from your insights and experience here.” Or do you mean: “I think we should do this. I need you to do this to make it happen.”
  • Don’t use jargon.

Be Relevant

  • Talk about what matters to the stakeholder.
  • Talk about what matters to the initiative.
  • Tailor the details of the message to each stakeholder’s specific concerns.
  • IT thinks in processes but stakeholders only care about results: talk in terms of results.
  • IT wants to be understood but this does not matter to stakeholders. Think: “what’s in it for them?”
  • Communicate truthfully; do not make false promises or hide bad news.

Be Concise

  • Keep communication short and to the point so key messages are not lost in the noise.
  • There is a risk of diluting your key message if you include too many other details.

"We tend to use a lot of jargon in our discussions, and that is a sure-fire way to turn people away. We realized the message wasn’t getting out because the audience wasn’t speaking the same language. You have to take it down to the next level and help them understand where the needs are."

– Jeremy Clement, Director of Finance, College of Charleston

Communication Mediums – Traditional

Use the following guidelines to help determine the appropriate medium for your communications.

Method Best Practices
Email Email announcements are necessary for every organizational change initiative but are never sufficient. Treat email as a formalizing medium, not a medium of effective communication when organizational change is concerned. Use email to invite people to in-person meetings, make announcements across teams and geographical areas at the same time, and share formal details.
Team Meeting Team meetings help sell change. Body language and other in-person cues are invaluable when trying to influence people. Team meetings also provide an opportunity to gauge a group’s response to an announcement and gives the audience an opportunity to ask questions and get clarification.
One-on-One One-on-ones are more effective than team meetings in their power to influence and gauge individual responses, but they aren’t feasible for large numbers of stakeholders. Use one-on-ones selectively: identify key stakeholders and influencers who are most able to either advocate change on your behalf or provide feedback (or both).
Internal Site / Repository Internal sites and repositories help sustain change by making knowledge available after the implementation. People don’t retain information very well when it isn’t relevant to them. Much of their training will be forgotten if they don’t apply that knowledge for several weeks or months. Use internal sites and repositories for how-to guides and standard operating procedures.

Communication Methods – Multimedia

Method Best Practices
User Interface Design User interface (UI) design is overlooked as a communication method. Often a simple UI refinement with the clearer prompts or warnings is more effective and efficient than additional training and repeated email reminders.
Social Media Social media is widely and deeply embraced by people publicly and is increasingly useful within organizations. Look for ways to leverage existing internal social tools. Avoid trying to introduce new social channels to communicate change unless social transformation is within the scope of the core project’s goals; the social tool itself might become as much of an organizational change management challenge as the original project.
Posters & Marketing Collateral Posters and other marketing collateral are common communication tools in retail and hospitality industries that change managers in other industries often don’t think of. Making key messages a vivid, visual part of people’s everyday environment is a very effective way to communicate. On the downside, marketing collateral requires professional design skills and can be costly to create. Professional copywriting is also advisable to ensure your message resonates.
Video Videos are well worth the cost to produce when the change is transformational in nature. Videos are useful for both communicating the vision and as part of the training plan.

Activity: Create a communications plan tailored to the interests of each of your respective stakeholders

4.2

  1. List all the affected stakeholders in order of importance in the first column.
    • Business stakeholders, end users, IT department, etc.
  2. Identify the frequency with which you will communicate to that group.
  3. Determine the scope of the communication:
    • What key information needs to be included in the message to ensure they are informed and on board?
    • Which medium(s) will you use to communicate to that specific group?
  4. Develop a concrete timeline that will be followed to ensure that support is maintained from the key stakeholders.
Audience Purpose Communication Type Communicator Timing
All IT Staff
  • Introduce and explain operating model
  • Communicate structural changes
  • Team Meeting
CIO
  • Sept 1 – Introduce new structure
  • Sept 15 – TBD
  • Sept 29 – TBD

INPUT

  • Prioritized list of Stakeholders

OUTPUT

  • Communication plan

Document in the Organizational Design Communications Deck

Activity: Create an FAQ to address common questions and concerns around your restructuring

4.3

  1. Once you have completed the communications plans for each of your stakeholders/stakeholder groups, review the scope of the communications to identify key similarities in themes or message.
  2. Beyond the completed communications plans, brainstorm a list of answers to the key “what’s” of your organizational design initiative:
    • What is the objective of the IT organization?
    • What are the primary changes to the IT organization?
    • What does the new organizational structure look like?
    • What are the benefits to our IT staff and to our business partners?
  3. Think about any key questions that may rise around the transition:
    • How will the IT management team share new information with me?
    • What is my role during the transition?
    • What impact is there to my reporting relationship within my department?
    • What are the key dates I should know about?
  4. Determine the best means of socializing this information. If you have an internal wiki or knowledge-sharing platform, this would be a useful place to host the information.

INPUT

  • Prioritized list of stakeholders

OUTPUT

  • Communication plan

Document in the Organizational Design Communications Deck

FAQ Examples

Question Response
What is the objective of the IT organization?

IT employees have always been committed to providing excellent solutions and support to the organization. However, the demands of the business have resulted in an ever-increasing project workload, and our ability to prioritize and meet business demands from a time and cost perspective has been stretched. We have a tremendous amount of skills and expertise on our team, but we need to find a way to leverage these as well as our tools and resources more effectively to meet this growth. Additionally, with each implementation, our environment has become increasingly complex and in order to meet service levels and sustain a stable production environment, teams have been realigned.

One of our primary objectives for the new organization is to create new and better ways to measure our performance in terms of how we operate and deliver services to the business. We will be looking at how we execute and deliver projects, the quality of our operations, and how we integrate new products and services. We are documenting an end-to-end software development lifecycle (SDLC) and will be preparing an IT services catalog and identifying service levels for our services.

What does the new organizational structure look like?

A high-level overview of the organizational structure has been attached for your reference; however, not all the organizational layers have been finalized. We can tell you that some groups will have little or no change in reporting relationships or job responsibilities, while others may have new management team members or additional or different responsibilities assigned. We will continue to share details of the plan with you as they develop.

(Note: Everyone should at least receive a copy of the high-level framework in addition to the director-level org chart; however, it would be great if the entire presentation was made available to employees.)

What are the benefits to our IT staff? We believe that this reorganization will increase opportunities for IT-led innovation, introduce opportunities to grow the IT organization, increase career growth opportunities and transparency around development, and help with capacity planning and constraints within the IT organization.
How will the IT management team share new information with me? As the organization structure evolves, we will continue to keep you informed. There will be team meetings to discuss roles and responsibilities and plan the transition, and we will continue to update you accordingly.
What is my role during this transition? To keep up with the demands of technology and the business, we must grow and change. We understand that people react to and deal with change differently, and we will work to make the transition as smooth and as successful as possible. There will be times when you have questions that we are not able to answer at that particular moment; we ask for your patience and understanding during the process. As a valued member of the IT team, we ask for your support and commitment to building a strong IT organization.
What impact is there to reporting relationships within my department? There may be changes at various levels depending on job function. The VPs have their new assignments, as do the directors. As we work through the reporting relationships for the senior managers/managers and their work groups, directors will be holding meetings with you to discuss any changes.
When will I know whether my role and responsibilities will change?

We expect that all reporting relationships will be defined by mid-September.

At this point, please continue to perform your role as usual unless your manager indicates differently. Our top priority over the next two months is to continue to meet our project and operational deliverables, while implementing the transition.

Your manager will communicate any changes in your role and responsibilities as soon as they are defined, and if you are transitioning to another manager or a new job, they will support you in your transition.

Finalize your Organizational Design Communications Deck by summarizing your vision and key design principles

4.4 Organizational Design Communications Deck

Purpose

The organizational effectiveness questionnaire provides a set of probative questions designed to help facilitate some high-level thinking around how IT is currently successful and where it is missing the mark. Use these to inform the following exercise around current inhibitors and future opportunities for the organization.

Steps

  1. Distribute the effectiveness questionnaire to key leadership within IT.
  2. Have each participant use the questions contained in the questionnaire to reflect on and self-analyze IT’s current structure and capabilities from the lens of their current role, as well as of the larger organization.
  3. Summarize the key findings and socialize them with the group prior to conducting an analysis of the current organizational pain points and opportunities.
Screenshot of Info-Tech's Organizational Design Communications Deck

Continue your momentum toward implementation by following Info-Tech’s methodology

Info-Tech's three phased approach to organizational transformation model is shown with part 2: structure highlighted.

Actively manage and assess the structure to ensure the entire redesign process isn’t required again

Facilitating the new structure implementation requires long- and short-term planning. Manage the implementation process using these steps.

Short term:

  • Set up skills and development plans for employees whose roles are changing.
  • Conduct multiple check-ins with function heads over the first three to six months of the project to get feedback and address any challenges that arise.
  • Be prepared to listen to employee feedback and complaints. Expect some pushback and be creative and compassionate in dealing with it.

Long term:

  • Continually assess the success of your structure.
  • Adopt your new department structure choices to inform succession planning, professional development, training opportunities, and hiring. These steps will ensure that you are continually addressing potential gaps and shortages.
  • Get business input continually to ensure that your structure is suited toward accommodating future goals; the business is bound to keep changing, and your department must change with it.

"You don’t have to see things through. You can make a plan, you can start to implement the plan, you can have a few bumps in the road, and you can re-evaluate. Sometimes the best thing to do is just say you know what? That wasn’t the right move to make; let’s figure out a new one."

– Avi Singer, Training and Organizational Development Consultant

A manufacturing organization overcame inexperience with organizational redesign through effective communications

CASE STUDY

Industry: Manufacturing

Source: CIO Testimonial

Challenge

The IT department had not undergone a major reorganization in several years. When they last reorganized, they experienced high turnover and decreased business satisfaction with IT. Many of the managers were new to their roles and only one of them had been around for the earlier reorganization. They lacked experience in leading their staff through major organizational changes. One of the major problems they faced was addressing the concerns, fears, and resistance of their staff properly.

Solution

The implementation team ran a workshop for all the managers in the department to train them on the change and how to communicate the impending changes to their staff. The workshop included information on resistance and conflict resolution. The workshop was conducted early in the planning phases of the reorganization so that any rumors or gossip could be addressed properly.

Results

The reorganization was well accepted by the staff due to the positive reinforcement from their managers. Rumors and gossip about the reorganization were under control and the staff adopted the new organizational structure quickly. Engagement levels of the staff were maintained and improved by 5% immediately after the reorganization. Voluntary turnover was minimal throughout the change as opposed to the previous reorganization where they lost 10% of their staff. There was an estimated cost savings of $250,000–$300,000.

Checkpoint: Are you ready to communicate your new structure to the rest of the organization?

Image advising moving on from phase 4 to finishing this blueprint

Self-Auditing Guidelines

  • Have you identified the key stakeholders that must be communicated with about the upcoming changes to the organizational structure?
  • Have you conducted an analysis of those stakeholders to identify the most effective means and type of communication?
  • Have you tailored a communication plan that pinpoints the frequency and scope of communications for specific stakeholder groups?
  • Have you conducted a final review of your operating model and new organizational structure and feel prepared to communicate it to the rest of the organization?
  • Have you prepared to address any questions or concerns that may arise from the change necessary to meet the new organizational structure?
  • Have you fully completed your Organizational Design Communications Deck?

If you want additional support, have our analysts guide you through this phase as part of an Info-Tech workshop

Book a workshop with our Info-Tech analysts:

Picture of Info-Tech analyst

  • To accelerate this project, engage your IT team in an Info-Tech workshop with an Info-Tech analyst team.
  • Info-Tech analysts will join you and your team onsite at your location or welcome you to Info-Tech’s historic Toronto office to participate in an innovative onsite workshop.
  • Contact your account manager (www.infotech.com/account), or email Workshops@InfoTech.com for more information.

The following are sample activities that will be conducted by Info-Tech analysts with your team:

Screenshot of activity 4.1

Conduct a stakeholder analysis to identify the impact and level of resistance from all stakeholders

Our analyst team will help you conduct a holistic analysis of the stakeholders impacted by your organizational restructuring and categorize them in terms of interest levels and hypothesized impact.

Screenshot of activity 4.2

Create a communications plan tailored to the interests of each of your respective stakeholders

Our analyst team will assist you in creating a communications plan to address each stakeholder and their respective interests.

Screenshot of activity 4.3

Create an FAQ to address common questions and concerns around your restructuring

Our analyst team will help you craft a set of frequently asked questions that stakeholders can leverage through the organizational restructuring process to quell concerns and maintain buy-in.

Screenshot of activity 4.4

Finalize your Organizational Design Communications Deck by summarizing your vision and key design principles

We will assist you in finalizing your communications deck for stakeholders, highlighting the major themes and vision for the future direction of the IT organization.

Summary of accomplishment

Knowledge Gained

  • An understanding of what organizational redesign constitutes at its practical core, and how to effectively succeed in designing your future-state organization.
  • The importance of design principles and operating models in remaining strategic and adaptive as an organization.
  • The importance of separating role design from individuals to ensure that the organization is aligned to its future-state capabilities rather than its current-state competencies.
  • The significance of effective communications in seeing the new structure from paper into practice.

Deliverables Completed

  • A list of organizational design principles customized to the strategic needs and desires of the organization.
  • A customized operating model that can be used to visualize the way IT creates value to the business and as a baseline framework of analysis for future organizational change decision making.
  • An operating model heat map that will provide a foundational analysis for where IT needs to place its efforts to reach its future-state structure.
  • A new organizational structure that includes work units, work unit mandates, strategically-aligned role design, and clear accountabilities and responsibilities for the organizational roles.
  • An overarching Organizational Design Communications Deck that can walk key stakeholders through key data inputs, decision-making points, and the strategic rationale for buying-in to the IT organizational redesign process.

Select Bibliography

Aronowitz, S. et al. “Getting organizational redesign right: Companies will better integrate their people, processes, and structures by following nine golden rules.” McKinsey Quarterly. June 2015.

Blenko, M. et al. “Winning Operating Models That Convert Strategy to Results.” Bain and Company. 10 December 2014.

Cable, Steve. “Design Principles - a guide.” cxpartners. 18 June 2015.

Cornelius & Associates. “The Qualities of Leadership: Leading Change.” 2010.

Deloitte. “Global Human Capital Trends 2016 – The new organization: different by design.” Deloitte University Press. 2016. Accessed 10 June 2017.

Fisher, Wayne, and Katie Kinnemeyer. “Organizational Design for Innovation: Applying the Creative Solving Process to Drive Innovation Effectiveness.” Rockdale Innovation. 2015.

Hanover Research. “Best Practices in Matrix Organizational Structures.” Hanover Research. December 2013.

IT4Business. “IT Standard for Business – A model for business-driven IT management.” Accessed 12 May 2017.

Master The Matrix blog. “Putting role clarity at the forefront of organizational restructuring paves the way to success.” Role Clarity Case Study. Nov. 2012.

McKinsey & Company. “McKinsey On Organization: Agility and Organization Design.” Accessed May 2017.

Morales Pedraza, Jorge. Answer to posting, “What is the relationship between structure and strategy?” ResearchGate.net.

Nielson, et al. “10 Guiding Principles Of Organization Design.” Forbes Magazine. 1 April 2015.

Reiser, Stephen, and Andy Short. “A new era begins: Redesigning the IT organization for a period of exponential change.” IBM Institute for Business Value. April 2013.

Roy, Somak. “Plan-Build-Run: the Divide-and-Conquer Style of IT.” iSG Insights. Accessed 12 May 2017.

Shapiro, Don. “Strategy follows structure, structure supports strategy.” First Concepts Consultants, Inc. 31 October 2012.

Stephenson, Richard N. “Effective Organizational Design: Best Practices To Grow By.” RichardStep. 10 May 2013.

Toma, Andrew, Fabrice Roghe, Brad Noakes, Rainer Strack, Julie Kilmann, and Ralf Dicke. “Flipping the Odds for Successful Reorganization.” The Boston Consulting Group. April 2012.

Zia-ur-Rehman, Azhar. “Using COBIT for IT Organizational Design.” ISACA. 19 December 2016.

APPENDIX

Centralization and Decentralization Models

Centralized service desks integrate the resources, processes, and technology of your support ecosystem

Model of centralized service desks. Shows model of the benefits of a centralized service desk.

A successful consolidation can significantly reduce cost per transaction, speed up service delivery, and improve the customer experience through:

  • Single point of contact for end users.
  • Integrated ITSM solution where it makes sense.
  • Standardized processes.
  • Staffing integration.
Centralization Outcome Expected Benefit
Integrated information The capacity to produce quick, accurate, and segmented reports of service levels across the organization.
Integrated staffing Flexible management of resources that better respond to organizational needs.
Integrated technology Reduced tool procurement costs, improved data integration, and increased information security.
Standardized processes Efficient and timely customer service and a more consistent customer experience.

Decentralized application teams allow for strong vertical expertise and flexibility to delivery on localized demand

When to Use:

  • Services are naturally partitioned (e.g. production lines).
  • Skills required for each vertical are different.
  • Innovation for each vertical is independent.

Pros:

  • Allocates strong vertical expertise.
  • Creates competing priorities and runs independently to determine best options in the future.
  • Clarifies accountability for each vertical.

Cons:

  • Difficult to scale out across two dimensions (e.g. product and region).
  • Lack of knowledge sharing that could apply across verticals.
  • Specialization fragmentation makes program management difficult.
Example decentralized model

Federated application teams enable a balance between responsiveness and centralized control

When to Use:

  • Verticals have common processes or expertise.
  • Greater control is required over specific area(s) while others can be delegated.
  • Services are outsourced to third parties.

Pros:

  • Allows some autonomy in verticals to reduce bottlenecks.
  • Emphasizes consistency in some area(s) across the board.
  • Shared resource pool could help lower overall cost.

Cons:

  • Interaction between verticals can be difficult if the centralized vertical is receiving information in different ways from the other verticals.
  • If the centralized vertical is of a support nature, it may become the bottleneck in servicing the other verticals.
  • Sharing between verticals can still be difficult because of specialist resource fragmentation.
Example federated model

Centralized application teams allow for higher efficiency and scales of economy by leveraging a shared resource pool

When to Use:

  • Global rollout is necessary.
  • Consistency is essential to execution.
  • Innovation should immediately benefit everyone.

Pros:

  • Shares common resource pool, which lowers costs.
  • Reduces specialization of resources.
  • Potentially lowers communication overhead for larger teams.

Cons:

  • Prioritization of resources may prevent projects from moving faster.
  • Deep expertise in a single domain may be diluted, leading to longer than normal cycles times for development.
  • Still does not address the possibility of verticals not communicating.
Example centralized model

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What Is a Blueprint?

A blueprint is designed to be a roadmap, containing a methodology and the tools and templates you need to solve your IT problems.

Each blueprint can be accompanied by a Guided Implementation that provides you access to our world-class analysts to help you get through the project.

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Get the help you need in this 4-phase advisory process. You'll receive 7 touchpoints with our researchers, all included in your membership.

Guided Implementation #1 - Build design principles and operating model
  • Call #1 - Craft a set of organizational design principles
  • Call #2 - Select a baseline operating model

Guided Implementation #2 - Customize the operating model
  • Call #1 - Determine target-state sourcing and centralization
  • Call #2 - Customize and heat map the IT operating model

Guided Implementation #3 - Define roles and work units
  • Call #1 - Define target-state work units
  • Call #2 - Define roles and responsibilities within new work units

Guided Implementation #4 - Communicate to stakeholders
  • Call #1 - Plan stakeholder communication

Contributors

  • Dan Humbert, IT Director, YMCA of Central Florida
  • John Arnold, CTO, Paysafe Group
  • Alan Fralick, CIO, Oldcastle Materials, Inc.
  • Nurith Rochon, CEO, Advanced Knowledge Innovations Inc.
  • 2 anonymous contributors
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