Redesign Your IT Organizational Structure

Designing an IT structure that will enable your strategic vision is not about an org chart – it’s about how you work.

EXECUTIVE BRIEF

Analyst Perspective

Structure enables strategy.

Allison Straker

Research Director,

Organizational Transformation

Brittany Lutes

Senior Research Analyst,

Organizational Transformation

An organizational structure is much more than a chart with titles and names. It defines the way that the organization operates on a day-to-day basis to enable the successful delivery of the organization’s information and technology objectives. Moreover, organizational design sees beyond the people that might be performing a specific role. People and role titles will and often do change frequently. Those are the dynamic elements of organizational design that allow your organization to scale and meet specific objectives at defined points of time. Capabilities, on the other hand, are focused and related to specific IT processes.

Redesigning an IT organizational structure can be a small or large change transformation for your organization. Create a structure that is equally mindful of the opportunities and the constraints that might exist and ensure it will drive the organization towards its vision with a successful implementation. If everyone understands why the IT organization needs to be structured that way, they are more likely to support and adopt the behaviors required to operate in the new structure.

Executive Summary

Your Challenge

Your organization needs to reorganize itself because:

• The current IT structure does not align to the strategic objectives of the organization.
• There are inefficiencies in how the IT function is currently operating.
• IT employees are unclear about their role and responsibilities, leading to inconsistencies.
• New capabilities or a change in how the capabilities are organized is required to support the transformation.

Common Obstacles

Many organizations struggle when it comes redesigning their IT organizational structure because they:

• Jump right into creating the new organizational chart.
• Do not include the members of the IT leadership team in the changes.
• Do not include the business in the changes.
• Consider the context in which the change will take place and how to enable successful adoption.

Info-Tech’s Approach

Successful IT organization redesign includes:

• Understanding the drivers, context, and strategies that will inform the structure.
• Remaining objective by focusing on capabilities over people or roles.
• Identifying gaps in delivery, sourcing strategies, customers, and degrees of centralization.
• Remembering that organizational design is a change initiative and will require buy-in.

Info-Tech Insight

A successful redesign requires a strong foundation and a plan to ensure successful adoption. Without these, the organizational chart has little meaning or value.

Your challenge

This research is designed to help organizations who are looking to:

• Redesign the IT structure to align to the strategic objectives of the enterprise.
• Increase the effectiveness in how the IT function is operating in the organization.
• Provide clarity to employees around their roles and responsibilities.
• Ensure there is an ability to support new IT capabilities and/or align capabilities to better support the direction of the organization.
• Align the IT organization to support a business transformation such as becoming digitally enabled or engaging in M&A activities.

Organizational design is a challenge for many IT and digital executives

69% of digital executives surveyed indicated challenges related to structure, team silos, business-IT alignment, and required roles when executing on a digital strategy.

Source: MIT Sloan, 2020

Common obstacles

These barriers make IT organizational redesign difficult to address for many organizations:

• Confuse organizational design and organizational charts as the same thing.
• Start with the organizational chart, not taking into consideration the foundational elements that will make that chart successful.
• Fail to treat organizational redesign as a change management initiative and follow through with the change.
• Exclude impacted or influential IT leaders and/or business stakeholders from the redesign process.
• Leverage an operating model because it is trending.

To overcome these barriers:

• Understand the context in which the changes will take place.
• Communicate the changes to those impacted to enable successful adoption and implementation of a new organizational structure.
• Understand that organizational design is for more than just HR leaders now; IT executives should be driving this change.

Succeed in Organizational Redesign

75% The percentage of change efforts that fail.

Source: TLNT, 2019

55% The percentage of practitioners who identify how information flows between work units as a challenge for their organization.

Source: Journal of Organizational Design, 2019

Organizational design defined

If your IT strategy is your map, your IT organizational design represents the optimal path to get there.

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.

Understand the organizational differences

Organizational Design

Organizational design the process in which you intentionally align the organizational structure to the strategy. It considers the way in which the organization should operate and purposely aligns to the enterprise vision. This process often considers centralization, sourcing, span of control, specialization, authority, and how those all impact or are impacted by the strategic goals.

Operating Model

Operating models provide an architectural blueprint of how IT capabilities are organized to deliver value. The placement of the capabilities can alter the culture, delivery of the strategic vision, governance model, team focus, role responsibility, and more. Operating model sketches should be foundational to the organizational design process, providing consistency through org chart changes.

Organizational Structure

The organizational structure is the chosen way of aligning the core processes to deliver. This can be strategic, or it can be ad hoc. We recommend you take a strategic approach unless ad hoc aligns to your culture and delivery method. A good organizational structure will include: “someone with authority to make the decisions, a division of labor and a set of rules by which the organization operates” (Bizfluent, 2019).

Organizational Chart

The capstone of this change initiative is an easy-to-read chart that visualizes the roles and reporting structure. Most organizations use this to depict where individuals fit into the organization and if there are vacancies. While this should be informed by the structure it does not necessarily depict workflows that will take place. Moreover, this is the output of the organizational design process.

Sources: Bizfluent, 2019; Strategy & Business, 2015; SHRM, 2021

The Technology Value Trinity

All three elements of the Technology Value Trinity work in harmony to delivery business value and achieve strategic needs. As one changes, the others need to change as well.

How do these three elements relate?

• Digital and IT strategy tells you what you need to achieve to be successful.
• Operating model and organizational design align resources to deliver on your strategy and priorities. This is done by strategically structuring IT capabilities in a way that enables the organizations vision and considers the context in which the structure will operate.
• I&T governance is the confirmation of IT’s goals and strategy, which ensures the alignment of IT and business strategy and is the mechanism by which you continuously prioritize work to ensure that what is delivered is in line with the strategy.

Too often strategy, organizational design, and governance are considered separate practices – strategies are defined without teams and resources to support. Structure must follow strategy.

Info-Tech’s approach to organizational design

Like a story, a strategy without a structure to deliver on it is simply words on paper.

Books begin by setting the foundation of the story.

Introduce your story by:

• Defining the need(s) that are driving this initiative forward.
• Introducing the business context in which the organizational redesign must take place.
• Outlining what’s needed in the redesign to support the organization in reaching its strategic IT goals.

The plot cannot thicken without the foundation. Your organizational structure and chart should not exist without one either.

The steps to establish your organizational chart - with functional teams, reporting structure, roles, and responsibilities defined – cannot occur without a clear definition of goals, need, and context. An organizational chart alone won’t provide the insight required to obtain buy-in or realize the necessary changes.

Conclude your story through change management and communication.

Good stories don’t end without referencing what happened before. Use the literary technique of foreshadowing – your change management must be embedded throughout the organizational redesign process. This will increase the likelihood that the organizational structure can be communicated, implemented, and reinforced by stakeholders.

Info-Tech uses a capability-based approach to help you design your organizational structure

Once your IT strategy is defined, it is critical to identify the capabilities that are required to deliver on those strategic initiatives. Each initiative will require a combination of these capabilities that are only supported through the appropriate organization of roles, skills, and team structures.

Embed change management into organizational design

Change management practices are needed from the onset to ensure the implementation of an organizational structure.

For each phase of this blueprint, its important to consider change management. These are the points when you need to communicate the structure changes:

• Phase 1: Begin to socialize the idea of new organizational structure with executive leadership and explain how it might be impactful to the context of the organization. For example, a new control, governance model, or sourcing approach could be considered.
• Phase 2: The chosen operating model will influence your relationships with the business and can create/eliminate silos. Ensure IT and business leaders have insight into these possible changes and a willingness to move forward.
• Phase 3: The new organizational structure could create or eliminate teams, reduce or increase role responsibilities, and create different reporting structures than before. It’s time to communicate these changes with those most impacted and be able to highlight the positive outcomes of the various changes.
• Phase 4: Should consider the change management practices holistically. This includes the type of change and length of time to reach the end state, communication, addressing active resistors, acquiring the right skills, and measuring the success of the new structure and its adoption.

Info-Tech Insight

Do not undertake an organizational redesign initiative if you will not engage in change management practices that are required to ensure its successful adoption.

Measure the value of the IT organizational redesign

Given that the organizational redesign is intended to align with the overall vision and objectives of the business, many of the metrics that support its success will be tied to the business. Adapt the key performance indicators (KPIs) that the business is using to track its success and demonstrate how IT can enable the business and improve its ability to reach those targets.

Strategic Resources

The percentage of resources dedicated to strategic priorities and initiatives supported by IT operating model. While operational resources are necessary, ensuring people are allocating time to strategic initiatives as well will drive the business towards its goal state. Leverage Info-Tech’s IT Staffing Assessment diagnostic to benchmark your IT resource allocation.

Business Satisfaction

Assess the improvement in business satisfaction overall with IT year over year to ensure the new structure continues to drive satisfaction across all business functions. Leverage Info-Tech’s CIO Business Vision diagnostic to see how your IT organization is perceived.

Role Clarity

The degree of clarity that IT employees have around their role and its core responsibilities can lead to employee engagement and retention. Consider measuring this core job driver by leveraging Info-Tech’s Employee Engagement Program.

Customer & User Satisfaction

Measure customer satisfaction with technology-enabled business services or products and improvements in technology-enabled client acquisition or retention processes. Assess the percentage of users satisfied with the quality of IT service delivery and leverage Info-Tech’s End-User Satisfaction Survey to determine improvements.

Info-Tech’s methodology for Redesigning Your IT Organization

Insight summary

Overarching insight

Organizational redesign processes focus on defining the ways in which you want to operate and deliver on your strategy – something an organizational chart will never be able to convey.

Phase 1 insight

Focus on your organization, not someone else's’. Benchmarking your organizational redesign to other organizations will not work. Other organizations have different strategies, drivers, and context.

Phase 2 insight

An operating model sketch that is customized to your organization’s specific situation and objectives will significantly increase the chances of creating a purposeful organizational structure.

Phase 3 insight

If you follow the steps outlined in the first three phases, creating your new organizational chart should be one of the fastest activities.

Phase 4 insight

Throughout the creation of a new organizational design structure, it is critical to involve the individuals and teams that will be impacted.

Tactical insight

You could have the best IT employees in the world, but if they aren’t structured well your organization will still fail in reaching its vision.

Blueprint deliverables

Each step of this blueprint is accompanied by supporting deliverables to help you accomplish your goals:

Communication Deck

Communicate the changes to other key stakeholders such as peers, managers, and staff.

Workbook

As you work through each of the activities, use this workbook as a place to document decisions and rationale.

Reference Deck

Definitions for every capability, base operating model sketches, and sample organizational charts aligned to those operating models.

Job Descriptions

Key deliverable:

Executive Presentation

Leverage this presentation deck to gain executive buy-in for your new organizational structure.

Blueprint benefits

IT Benefits

• Create an organizational structure that aligns to the strategic goals of IT and the business.
• Provide IT employees with clarity on their roles and responsibilities to ensure the successful delivery of IT capabilities.
• Highlight and sufficiently staff IT capabilities that are critical to the organization.
• Define a sourcing strategy for IT capabilities.
• Increase employee morale and empowerment.

Business Benefits

• IT can carry out the organization’s strategic mission and vision of all technical and digital initiatives.
• Business has clarity on who and where to direct concerns or questions.
• Reduce the likelihood of turnover costs as IT employees understand their roles and its importance.
• Create a method to communicate how the organizational structure aligns with the strategic initiatives of IT.
• Increase ability to innovate the organization.

Executive Brief Case Study

IT design needs to support organizational and business objectives, not just IT needs.

INDUSTRY: Government

SOURCE: Analyst Interviews and Working Sessions

Situation

IT was tasked with providing equality to the different business functions through the delivery of shared IT services. The government created a new IT organizational structure with a focus on two areas in particular: strategic and operational support capabilities.

Challenge

When creating the new IT structure, an understanding of the complex and differing needs of the business functions was not reflected in the shared services model.

Outcome

As a result, the new organizational structure for IT did not ensure adequate meeting of business needs. Only the operational support structure was successfully adopted by the organization as it aligned to the individual business objectives. The strategic capabilities aspect was not aligned to how the various business lines viewed themselves and their objectives, causing some partners to feel neglected.

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 are used throughout all four options.

Guided Implementation

What does a typical GI on this topic look like?

A Guided Implementation (GI) is a series of calls with an Info-Tech analyst to help implement our best practices in your organization. A typical GI is 8 to 12 calls over the course of 4 to 6 months.

Phase 1

Call #1: Define the process, understand the need, and create a plan of action.

Phase 2

Call #2: Define org. design drivers and business context.

Call #3: Understand strategic influences and create customized design principles.

Call #4: Customize, analyze gaps, and define sourcing strategy for IT capabilities.

Call #5: Select and customize the IT operating model sketch.

Phase 3

Call #6: Establish functional work units and their mandates.

Call #7: Translate the functional organizational chart to an operational organizational chart with defined roles.

Phase 4

Call #8: Consider risks and mitigation tactics associated with the new structure and select a transition plan.

Call #9: Create your change message, FAQs, and metrics to support the implementation plan.

Workshop Overview

Contact your account representative for more information.

workshops@infotech.com 1-888-670-8889

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

Risk Management: Create, implement, and monitor risk management plan.

HR Management: Develop job descriptions, conduct job evaluation, and develop compensation packages.

Monitor and Sustain Stakeholder Engagement

Phase 1

Establish the Organizational Redesign Foundation

This phase will walk you through the following activities:

1.1 Define the organizational redesign driver(s)

1.2 Create design principles based on the business context

1.3a (Optional Exercise) Identify the capabilities from your value stream

1.3b Identify the capabilities required to deliver on your strategies

1.4 Finalize your list of design principles

This phase involves the following participants:

• CIO
• IT Leadership
• Business Leadership

Embed change management into the organizational design process

Articulate the Why

Changes are most successful when leaders clearly articulate the reason for the change – the rationale for the organizational redesign of the IT function. Providing both staff and executive leaders with an understanding for this change is imperative to its success. Despite the potential benefits to a redesign, they can be disruptive. If you are unable to answer the reason why, a redesign might not be the right initiative for your organization.

Employees who understand the rationale behind decisions made by executive leaders are 3.6 times more likely to be engaged.

McLean & Company Engagement Survey Database, 2021; N=123,188

Info-Tech Insight

Successful adoption of the new organizational design requires change management from the beginning. Start considering how you will convey the need for organizational change within your IT organization.

The foundation of your organizational design brings together drivers, context, and strategic implications

All aspects of your IT organization’s structure should be designed with the business’ context and strategic direction in mind.

Use the following set of slides to extract the key components of your drivers, business context, and strategic direction to land on a future structure that aligns with the larger strategic direction.

REDESIGN DRIVERS

Driver(s) can originate from within the IT organization or externally. Ensuring the driver(s) are easy to understand and articulate will increase the successful adoption of the new organizational structure.

BUSINESS CONTEXT

Defines the interactions that occur throughout the organization and between the organization and external stakeholders. The context provides insight into the environment by both defining the purpose of the organization and the values that frame how it operates.

STRATEGY IMPLICATIONS

The IT strategy should be aligned to the overall business strategy, providing insight into the types of capabilities required to deliver on key IT initiatives.

Understand IT’s desired maturity level, alignment with business expectations, and capabilities of IT

Where are we today?

Determine the current overall maturity level of the IT organization.

Where do we want to be as an organization?

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

How can you leverage these results?

The result of these diagnostics will inform the design principles that you’ll create in this phase.

Leverage Info-Tech’s diagnostics to provide an understanding of critical areas your redesign can support:

CIO Business Vision Diagnostic

Management & Governance Diagnostic

IT Staffing Diagnostic

Consider the organizational design drivers

Consider organizational redesign if …

Effectiveness is a concern:

• Insufficient resources to meet demand
• Misalignment to IT (and business) strategies
• Lack of clarity around role responsibility or accountability
• IT functions operating in silos

New capabilities are needed:

• Organization is taking on new capabilities (digital, transformation, M&A)
• Limited innovation
• Gaps in the capabilities/services of IT
• Other external environmental influences or changes in strategic direction

Lack of business understanding

• Misalignment between business and IT or how the organization does business
• Unhappy customers (internal or external)

Workforce challenges

• Frequent turnover or inability to attract new skills
• Low morale or employee empowerment

These are not good enough reasons …

• New IT leader looking to make a change for the sake of change or looking to make their legacy known
• To work with specific/hand-picked leaders over others
• To “shake things up” to see what happens
• To force the organization to see IT differently

Info-Tech Insight

Avoid change for change’s sake. Restructuring could completely miss the root cause of the problem and merely create a series of new ones.

1.1 Define the organizational redesign driver(s)

1-2 hours

1. As a group, 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. Group these pain points and opportunities into themes.
2. Leverage the pain points and opportunities to help further define why this initiative is something you’re driving towards. Consider how you would justify this initiative to different stakeholders in the organization.
3. Questions to consider:
1. Who is asking for this initiative?
2. What are the primary benefits this is intended to produce?
3. What are you optimizing for?
4. What are we capable of achieving as an IT organization?
5. Are the drivers coming from inside or outside the IT organization?
4. Once you’ve determined the drivers for redesigning the IT organization, prioritize those drivers to ensure there is clarity when communicating why this is something you are focusing time and effort on.

Record the results in the Organizational Design Communications Deck

Frame the organizational design within the context of the business

Workforce Considerations:

• How does your organization view its people resources? Does it have the capacity to increase the number of resources?
• Do you currently have sufficient staff to meet the demands of the organization? Are you able to outsource resources when demand requires it?
• Are the members of your IT organization unionized?
• Is your workforce distributed? Do time zones impact how your team can collaborate?

Business context considerations

Business context considerations

Business context considerations

Business context considerations

Business context considerations

1.2 Create design principles based on the business context

1-3 hours

1. Discuss the business context in which the IT organizational redesign will be taking place. Consider the following standard components of the business context; include other relevant components specific to your organization:
• Culture
• Workforce Considerations
• Control and Governance
• Financial Constraints
• Business Perspective of IT
• Business Organization Structure and Growth
• Sourcing Strategy
• Change Tolerance
• Stakeholder Engagement and Focus
• Business Vision, Services, and Products
2. Different stakeholders can have different perspectives on these questions. Be sure to consider a holistic approach and engage these individuals.
3. Capture your findings and use them to create initial design principles.

Record the results in the Organizational Design Communications Deck

How your IT organization is structured needs to reflect what it must be built to do

Structure follows strategy – the way you design will impact what your organization can produce.

Designing your IT organization requires an assessment of what it needs to be built to do:

• What are the most critical capabilities that you need to deliver, and what does success look like in those different areas?
• What are the most important things that you deliver overall in your organization?

The IT organization must reflect your business needs:

• Understand your value stream and/or your prioritized business goals.
• Understand the impact of your strategies – these can include your overall digital strategy and/or your IT strategy

1.3a (Optional Exercise) Identify the capabilities from your value stream

1 hour

1. Identify your organization’s value stream – what your overall organization needs to do from supplier to consumer to provide value. Leverage Info-Tech’s industry reference architectures if you haven’t identified your value stream, or use the Document Your Business Architecture blueprint to create yours.
2. For each item in your value stream, list capabilities that are critical to your organizational strategy and IT needs to further invest in to enable growth.
3. Also, list those that need further support, e.g. those that lead to long wait times, rework time, re-tooling, down-time, unnecessary processes, unvaluable processes.*
4. Capture the IT capabilities required to enable your business in your draft principles.

Source: Six Sigma Study Guide, 2014

Record the results in the Organizational Design Communications Deck

Your strategy will help you decide on your structure

Ensure that you have a clear view of the goals and initiatives that are needed in your organization. Your IT, digital, business, and/or other strategies will surface the IT capabilities your organization needs to develop. Identify the goals of your organization and the initiatives that are required to deliver on them. What capabilities are required to enable these? These capabilities will need to be reflected in your design principles.

Sample initiatives and capabilities from an organization’s strategies

1.3b Identify the capabilities required to deliver on your strategies

1 hour

1. For each IT goal, there may be one or more initiatives that your organization will need to complete in order to be successful.
2. Document those goals and infinitives. For each initiative, consider which core IT capabilities will be required to deliver on that goal. There might be one IT capability or there might be several.
3. Identify which capabilities are being repeated across the different initiatives. Consider whether you are currently investing in those capabilities in your current organizational structure.
4. Highlight the capabilities that require IT investment in your design principles.

Record the results in the Organizational Design Communications Deck

Create your 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. This foundational step is critical: one of the key reasons for organizational design failure is a lack of requisite time spent on the front-end understanding what is the best fit.

1.4 Finalize your list of design principles

1-3 hours

1. As a group, review the key outputs from your data collection exercises and their implications.
2. Consider each of the previous exercises – where does your organization stand from a maturity perspective, what is driving the redesign, what is the business context, and what are the key IT capabilities requiring support. Identify how each will have an implication on your organizational redesign. Leverage this conversation to generate design principles.
3. Vote on a finalized list of eight to ten 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 everyone has the same understanding of what this means moving forward.

Record the results in the Organizational Design Communications Deck

Example design principles

Your eight to ten design principles will be those that are most relevant to YOUR organization. Below are samples that other organizations have created, but yours will not be the same.

Phase 2

Create the Operating Model Sketch

This phase will walk you through the following activities:

2.1 Augment the capability list

2.2 Heatmap capabilities to determine gaps in service

2.3 Identify the target state of sourcing for your IT capabilities

2.4 Review and select a base operating model sketch

2.5 Customize the selected overlay to reflect the desired future state

This phase involves the following participants:

• CIO
• IT Leadership

Embed change management into the organizational design process

Gain Buy-In

Obtain desire from stakeholders to move forward with organizational redesign initiative by involving them in the process to gain interest. This will provide the stakeholders with assurance that their concerns are being heard and will help them to understand the benefits that can be anticipated from the new organizational structure.

“You’re more likely to get buy-in if you have good reason for the proposed changes – and the key is to emphasize the benefits of an organizational redesign.”

Source: Lucid Chart

Info-Tech Insight

Just because people are aware does not mean they agree. Help different stakeholders understand how the change in the organizational structure is a benefit by specifically stating the benefit to them.

Info-Tech uses capabilities in your organizational design

We differentiate between capabilities and competencies.

Capabilities

• Capabilities are focused on the entire system that would be in place to satisfy a particular need. This includes the people who are competent to complete a specific task and also the technology, processes, and resources to deliver.
• Capabilities work in a systematic way to deliver on specific need(s).
• A functional area is often made up of one or more capabilities that support its ability to deliver on that function.
• Focusing on capabilities rather then the individuals in organizational redesign enables a more objective and holistic view of what your organization is striving toward.

Competencies

• Competencies on the other hand are specific to an individual. It determines if the individual poses the skills or ability to perform.
• Competencies are rooted in the term competent, which looks to understand if you are proficient enough to complete the specific task at hand.

Source: The People Development Magazine, 2020

Use our IT capabilities to establish your IT organization design

2.1 Augment the capability list

1-3 hours

1. Using the capability list on the previous slide, go 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.
2. 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.
3. 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.
4. Document the rationale for decisions made for future reference.

Record the results in the Organizational Design Workbook

Gaps in delivery

Identify areas that require greater focus and attention.

Assess the gaps between where you currently are and where you need to be. Evaluate how critical and how effective your capabilities are:

• Criticality = Importance
• Try to focus on those which are highly critical to the organization.
• These may be capabilities that have been identified in your strategies as areas to focus on.
• Effectiveness = Performance
• Identify those where the process or system is broken or ineffective, preventing the team from delivering on the capability.
• Effectiveness could take into consideration how scalable, adaptable, or sustainable each capability is.
• Focus on the capabilities that are low or medium in effectiveness but highly critical. Addressing the delivery of these capabilities will lead to the most positive outcomes in your organization.

Remember to identify what allows the highly effective capabilities to perform at the capacity they are. Leverage this when increasing effectiveness elsewhere.

High Gap

There is little to no effectiveness (high gap) and the capability is highly important to your organization.

Medium Gap

Current ability is medium in effectiveness (medium gap) and there might be some priority for that capability in your organization.

Low Gap

Current ability is highly effective (low gap) and the capability is not necessarily a priority for your organization.

2.2 Heatmap capabilities to determine gaps in delivery

1-3 hours

1. At this point, you should have identified what capabilities you need to have to deliver on your organization's goals and initiatives.
2. Convene a group of the key stakeholders involved in the IT organizational design initiative.
3. Review your IT capabilities and color each capability border according to the effectiveness and criticality of that capability, creating a heat map.
• Green indicates current ability is highly effective (low gap) and the capability is not necessarily a priority for your organization.
• Yellow indicates current ability is medium in effectiveness (medium gap) and there might be some priority for that capability in your organization.
• Red indicates that there is little to no effectiveness (high gap) and the capability is highly important to your organization.

Record the results in the Organizational Design Workbook

Don’t forget the why: why are you considering outsourcing?

There are a few different “types” of outsourcing:

1. Competitive Advantage – Working with a third-party organization for the knowledge, insights, and best practices they can bring to your organization.
2. Managed Service– The third party manages a capability or function for your organization.
3. Staff Augmentation – Your organization brings in contractors and third-party organizations to fill specific skills gaps.

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

Your strategy for outsourcing will vary with capability and capacity

Use these criteria to inform your right sourcing strategy

2.3 Identify capabilities that could be outsourced

1-3 hours

1. For each of the capabilities that will be in your future-state operating model, determine if it could be outsourced. Review the sourcing criteria available on the previous slide to help inform which sourcing strategy you will use for each capability.
2. When looking to outsource or co-source capabilities, consider why that capability would be outsourced:
• Competitive Advantage – Work with a third-party organization for the knowledge, insights, and best practices they can bring to your organization.
• Managed Service – The third party manages a capability or function for your organization.
• Staff Augmentation – Your organization brings in contractors and third-party organizations to fill specific skills gaps.
3. Place an asterisk (*) around the capabilities that will be leveraging one of the three previous sourcing options.

Record the results in the Organizational Design Workbook

What is an operating model?

Leverage a cohesive operating model throughout the organizational design process.

An IT operating model sketch is a visual representation of the way your IT organization needs to be designed and the capabilities it requires to deliver on the business mission, strategic objectives, and technological ambitions. It ensures consistency of all elements in the organizational structure through a clear and coherent blueprint.

The visual should be the optimization and alignment of the IT organization’s structure to deliver the capabilities required to achieve business goals. Additionally, it should clearly show the flow of work so that key stakeholders can understand where inputs flow in and outputs flow out of the IT organization. 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.

Info-Tech Insight

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.

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

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

Decentralization can take a number of different forms depending on the products 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

Decentralization by lines of business (LoB) aligns decision making with business operating units based on related functions or value streams. Localized priorities focus the decision making from the CIO or IT leadership team. This form of decentralization is beneficial in settings where each line of business has a unique set of products or services that require specific expertise or flexible resourcing staffing between the teams.

Product Line

Decentralization by product line organizes your team into operationally aligned product families to improve delivery throughput, quality, and resource flexibility within the family. By adopting this approach, you create stable product teams with the right balance between flexibility and resource sharing. This reinforces value delivery and alignment to enterprise goals within the product lines.

Geographical

Geographical decentralization reflects a shift from centralized to regional influences. When teams are in different locations, they can experience a number of 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.

Functional

Functional decentralization allows the IT organization to be separated by specialty areas. Organizations structured by functional specialization can often be organized into shared service teams or centers of excellence whereby people are grouped based on their technical, domain, or functional area within IT (Applications, Data, Infrastructure, Security, etc.). This allows people to develop specialized knowledge and skills but can also reinforce silos between teams.

2.4 Review and select a base operating model sketch

1 hour

1. Review the set of base operating model sketches available on the following slides.
2. For each operating model sketch, there are benefits and risks to be considered. Make an informed selection by understanding the risks that your organization might be taking on by adopting that particular operating model.
3. If at any point in the selection process the group is unsure about which operating model will be the right fit, refer back to your design principles established in activity 1.4. These should guide you in the selection of the right operating model and eliminate those which will not serve the organization.

Record the results in the Organizational Design Workbook

Centralized Operating Model #1: Plan-Build-Run

I want to…

• Establish a formalized governance process that takes direction from the organization on which initiatives should be prioritized by IT.
• Ensure there is a clear separation between teams that are involved in strategic planning, building solutions, and delivering operational support.
• Be able to plan long term by understanding the initiatives that are coming down the pipeline and aligning to an infrequent budgeting plan.

BENEFITS

• Effective at implementing long-term plans efficiently; separates maintenance and projects to allow each to have the appropriate focus.
• More oversight over financials; better suited for fixed budgets.
• Works across centralized technology domains to better align with the business’ strategic objectives – allows for a top-down approach to decision making.
• Allows for economies of scale and expertise pooling to improve IT’s efficiency.
• Well-suited for a project-driven environment that employs waterfall or a hybrid project management methodology that is less iterative.

RISKS

• Creates artificial silos between the build (developers) and run (operations staff) teams, as both teams focus on their own responsibilities and often fail to see the bigger picture.
• Miss opportunities to deliver value to the organization or innovate due to an inability to support unpredictable/shifting project demands as decision making is centralized in the plan function.
• The portfolio of initiatives being pursued is often determined before requirements analysis takes place, meaning the initiative might be solving the wrong need or problem.
• Depends on strong hand-off processes to be defined and strong knowledge transfer from build to run functions in order to be successful.

Centralized Operating Model #2: Demand-Develop-Service

I want to…

• Listen to the business to understand new initiatives or service enhancements being requested.
• Enable development and operations to work together to seamlessly deliver in a DevOps culture.
• Govern and confirm that initiatives being requested by the business are still aligned to IT’s overarching strategy and roadmap before prioritizing those initiatives.

BENEFITS

• Aligns well with an end-to-end services model; constant attention to customer demand and service supply.
• Centralizes service operations under one functional area to serve shared needs across lines of business.
• Allows for economies of scale and expertise pooling to improve IT’s efficiency.
• Elevates sourcing and vendor management as its own strategic function; lends well to managed service and digital initiatives.
• Development and operations housed together; lends well to DevOps-related initiatives and reduces the silos between these two core groups.

RISKS

• IT prioritizes the initiatives it thinks are a priority to the business based on how well it establishes good stakeholder relations and communications.
• Depends on good governance to prevent enhancements and demands from being prioritized without approval from those with accountability and authority.
• This model thrives in a DevOps culture but does not mean it ensures your organization is a “DevOps” organization. Be sure you're encouraging the right behaviors and attitudes.

Hybrid Operating Model #1: LOB/Functional Aligned

I want to…

• Better understand the various needs of the organization to align IT priorities and ensure the right services can be delivered.
• Keep all IT decisions centralized to ensure they align with the overarching strategy and roadmap that IT has set.
• Organize your shared services in a strategic manner that enables delivery of those services in a way that fits the culture of the organization and the desired method of operating.

BENEFITS

• Best of both worlds of centralization and decentralization; attempts to channel benefits from both centralized and decentralized models.
• Embeds key IT functions that require business knowledge within functional areas, allowing for critical feedback and the ability to understand those business needs.
• Places IT in a position to not just be “order takers” but to be more involved with the different business units and promote the value of IT.
• Achieves economies of scale where necessary through the delivery of shared services that can be requested by the function.
• Shared services can be organized to deliver in the best way that suits the organization.

RISKS

• Different business units may bypass governance to get their specific needs met by functions – to alleviate this, IT must have strong governance and prioritize amongst demand.
• Decentralized role can be viewed as an order taker by the business if not properly embedded and matured.
• No guaranteed synergy and integration across functions; requires strong communication, collaboration, and steering.
• Cannot meet every business unit’s needs – can cause tension from varying effectiveness of the IT functions.

Hybrid Model #2: Product-Aligned Operating Model

I want to…

• Align my IT organization into core products (services) that IT provides to the organization and establish a relationship with those in the organization that have alignment to that product.
• Have roles dedicated to the lifecycle of their product and ensure the product can continuously deliver value to the organization.
• Maintain centralized set of standards as it applies to overall IT strategy, security, and architecture to ensure consistency across products and reduce silos.

BENEFITS

• Focus is on the full lifecycle of a product – takes a strategic view of how technology enables the organization.
• Promotes centralized backlog around a specific value creator, rather than a traditional project focus that is more transactional.
• Dedicated teams around the product family ensure you have all of the resources required to deliver on your product roadmap.
• Reduces barriers between IT and business stakeholders; focuses on technology as a key strategic enabler.
• Delivery is largely done through frequent releases that can deliver value.

RISKS

• If there is little or no business involvement, it could prevent IT from truly understanding business demand and prioritizing the wrong work.
• A lack of formal governance can create silos between the IT products, causing duplication of efforts, missed opportunities for collaboration, and redundancies in application or vendor contracts.
• Members of each product can interpret the definition of standards (e.g. architecture, security) differently.

Hybrid Operating Model #3: Service-Aligned Operating Model

I want to…

• Decentralize the IT organization by the various IT services it offers to the organization while remaining centralized with IT strategy, governance, security and operational services.
• Ensure IT services are defined and people resources are aligned to deliver on those services.
• Enable each of IT’s services to have the autonomy to understand the business needs and be able to manage the operational and new project initiatives with a dedicated service owner or business relationship manager.

BENEFITS

• Strong enabler of agility as each service has the autonomy to make decisions around operational work versus project work based on their understanding of the business demand.
• Individuals in similar roles that are decentralized across services are given coaching to provide common direction.
• Allows teams to efficiently scale with service demand.
• This is a structurally baseline DevOps model. Each group will have services built within that have their own dedicated teams that will handle the full gambit of responsibilities, from new features to enhancements and maintenance.

RISKS

• Service owners require a method to collaborate to avoid duplication of efforts or projects that conflict with the efforts of other IT services.
• May result in excessive cost through role redundancies across different services, as each will focus on components like integration, stakeholder management, project management, and user experiences.
• Silos cause a high degree of specialization, making it more difficult for team members to imagine moving to another defined service group, limiting potential career advancement opportunities.
• The level of complex knowledge required by shared services (e.g. help desk) is often beyond what they can provide, causing them to rely on and escalate to defined service groups more than with other operating models.

Decentralized Model: Division Decentralization (LoB, Geography, Function, Product)

I want to…

• Decentralize the IT organization to enable greater autonomy within specific groups that have differing customer demands and levels of support.
• Maintain a standard level of service that can be provided by IT for all divisions.
• Ensure each division has access to critical data and reports that supports informed decision making.

BENEFITS

• Organization around functions allows for diversity in approach in how areas are run to best serve a specific business unit’s needs.
• Each functional line exists largely independently, with full capacity and control to deliver service at the committed SLAs.
• Highly responsive to shifting needs and demands with direct connection to customers and all stages of the solution development lifecycle.
• Accelerates decision making by delegating authority lower into the function.
• Promotes a flatter organization with less hierarchy and more direct communication with the CIO.

RISKS

• Requires risk and security to be centralized and have oversight of each division to prevent the decisions of one division from negatively impacting other divisions or the enterprise.
• Less synergy and integration across what different lines of business are doing can result in redundancies and unnecessary complexity.
• Higher overall cost to the IT group due to role and technology duplication across different divisions.
• It will be difficult to centralize aspects of IT in the future, as divisions adopt to a culture of IT autonomy.

Enterprise Model: Multi-Modal

I want to…

• Have an organizational structure that leverages several different operating models based on the needs and requirements of the different divisions.
• Provide autonomy and authority to the different divisions so they can make informed and necessary changes as they see fit without seeking approval from a centralized IT group.
• Support the different initiatives the enterprise is focused on delivering and ensure the right model is adopted based on those initiatives.

BENEFITS

• Allows for the organization to work in ways that best support individual areas; for example, areas that support legacy systems can be supported through traditional operating models while areas that support digital transformations may be supported through more flexible operating models.
• Enables a specialization of knowledge related to each division.

RISKS

• Inconsistency across the organization can lead to confusion on how the organization should operate.
• Parts of the organization that work in more traditional operating models may feel limited in career growth and innovation.
• Cross-division initiatives may require greater oversight and a method to enable operations between the different focus areas.

Create enabling teams that bridge your divisions

The following bridges might be necessary to augment your divisions:

• Specialized augmentation: There might not be a sufficient number of resources to support each division. These teams will be leveraged across the divisions; this means that the capabilities needed for each division will exist in this bridge team, rather than in the division.
• Centers of Excellence: Capabilities that exist within divisions can benefit from shared knowledge across the enterprise. Your organization might set up centers of excellence to support best practices in capabilities organization wide. These are Forums in the unfix model, or communities of practice and support capability development rather than deliveries of each division.
• Facilitation teams might be required to support divisions through coaching. This might include Agile or other coaches who can help teams adopt practices and embed learnings.
• Holistic teams provide an enterprise view as they work with various divisions. This can include capabilities like user experience, which can benefit from the holistic perspective rather than a siloed one. People with these capabilities augment the divisions on an as-needed basis.

2.5 Customize the selected sketch to reflect the desired future state

1-3 hours

1. Using the baseline operating model sketch, walk through each of the IT capabilities. Based on the outputs from activity 2.1:
1. Remove any capabilities for which your IT organization is not responsible and/or accountable.
2. 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.
3. Add any core capabilities from your organization that are missing from the provided IT capability list.
2. Move capabilities to the right places in the operating model to reflect how each of the core IT processes should interact with one another.
3. Add bridges as needed to support the divisions in your organization. Identify which capabilities will sit in these bridges and define how they will enable the operating model sketch to deliver.

Record the results in the Organizational Design Workbook

Document the final operating model sketch in the Communications Deck

Phase 3

Formalize the Organizational Structure

This phase will walk you through the following activities:

3.1 Create work units

3.2 Create work unit mandates

3.3 Define roles inside the work units

3.4 Finalize the organizational chart

3.5 Identify and mitigate key risks

This phase involves the following participants:

• CIO
• IT Leadership
• Business Leadership

Embed change management into the organizational design process

Enable adoption of the new structure.

You don’t have to make the change in one big bang. You can adopt alternative transition plans such as increments or pilots. This allows people to see the benefits of why you are undergoing the change, allows the change message to be repeated and applied to the individuals impacted, and provides people with time to understand their role in making the new organizational structure successful.

“Transformational change can be invigorating for some employees but also highly disruptive and stressful for others.”

Source: OpenStax, 2019

Info-Tech Insight

Without considering the individual impact of the new organizational structure on each of your employees, the change will undoubtedly fail in meeting its intended goals and your organization will likely fall back into old structured habits.

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. The number of work units you require and their names will not match your operating model one to one. Certain functional areas will need to be broken down into smaller work units to ensure appropriate leadership and span of control.

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.

Work Unit Examples

Here is a list of example work units you can use to brainstorm what your organization’s could 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

Example of work units

3.1 Create functional work units

1-3 hours

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 has 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.

Record the results in the Organizational Design Workbook

Group formation

Understand the impact of the functional groups you create.

A group consists of two or more individuals who are working toward a common goal. Group formation is how those individuals are organized to deliver on that common goal. It should take into consideration the levels of hierarchy in your structure, the level of focus you give to processes, and where power is dispersed within your organizational design.

Importance: Balance highly important capabilities with lower priority capabilities

Specialization: The scope of each role will be influenced by specialized knowledge and a dedicated leader

Effectiveness: Group capabilities that increase their efficacy

Span of Control: Identify the right number of employees reporting to a single leader

Choose the degree of specialization required

Be mindful of the number of hats you’re placing on any one role.

• Specialization exists when individuals in an organization are dedicated to performing specific tasks associated with a common goal and requiring a particular skill set. Aligning the competencies required to carry out the specific tasks based on the degree of complexity associated with those tasks ensures the right people and number of people can be assigned.
• When people are organized by their specialties, it reduces the likelihood of task switching, reduces the time spent training or cross-training, and increases the focus employees can provide to their dedicated area of specialty.
• There are disadvantages associated with aligning teams by their specialization, such as becoming bored and seeing the tasks they are performing as monotonous. Specialization doesn’t come without its problems. Monitor employee motivation

Info-Tech Insight

Smaller organizations will require less specialization simply out of necessity. To function and deliver on critical processes, some people might be asked to wear several hats.

Avoid overloading the cognitive capacity of employees

Cognitive load refers to the number of responsibilities that one can successfully take on.

• When employees are assigned an appropriate number of responsibilities this leads to:
• Engaged employees
• Less task switching
• Increased effectiveness on assigned responsibilities
• Reduced bottlenecks
• While this cognitive load can differ from employee to employee, when assigning role responsibilities, ensure each role isn’t being overburdened and spreading their focus thin.
• Moreover, capable does not equal successful. Just because someone has the capability to take on more responsibilities doesn’t mean they will be successful.
• Leverage the cognitive load being placed on your team to help create boundaries between teams and demonstrate clear role expectations.

Source: IT Revolution, 2021

Info-Tech Insight

When you say you are looking for a team that is a “jack of all trades,” you are likely exceeding appropriate cognitive loads for your staff and losing productivity to task switching.

Factors to consider for span of control

Too many and too few direct reports have negative impacts on the organization.

Complexity: More complex work should have fewer direct reports. This often means the leader will need to provide lots of support, even engaging in the work directly at times.

Demand: Dynamic shifts in demand require more managerial involvement and therefore should have a smaller span of control. Especially if this demand is to support a 24/7 operation.

Competency Level: Skilled employees should require less hands-on assistance and will be in a better position to support the business as a member of a larger team than those who are new to the role.

Purpose: Strategic leaders are less involved in the day-to-day operations of their teams, while operational leaders tend to provide hands-on support, specifically when short-staffed.

Group formation will influence communication structure

Pick your poison…

It’s important to understand the impacts that team design has on your services and products. The solutions that a team is capable of producing is highly dependent on how teams are structured. For example, Conway’s Law tells us that small distributed software delivery teams are more likely to produce modular service architecture, where large collocated teams are better able to create monolithic architecture. This doesn’t just apply to software delivery but also other products and services that IT creates. Note that small distributed teams are not the only way to produce quality products as they can create their own silos.

Sources: Forbes, 2017

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 work unit will have a unique mandate. 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. 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.

Examples of 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 the 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.

3.2 Create work unit mandates

1-3 hours

1. Break into teams of three to four people and assign an equal number of work units to each team.
2. Have each team create a set of statements that describe the overall purpose of that working group. Each mandate statement should:
• Be clear enough that any reader can understand.
• Explain why the work unit exists, what it does, and what it is accountable for.
• 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.
3. Have each group present their work unit mandates and make changes wherever necessary.

Record the results in the Organizational Design Workbook

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).

Info-Tech Insight

Do not bias your role design by focusing on your existing staff’s competencies. 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.

3.3 Define roles inside the work units

1-3 hours

1. Select a work unit from the organizational sketch.
2. Describe the most senior role in that work unit by asking, “what would the leader of this group be accountable or responsible for?” Define this role and move the capabilities they will be accountable for under that leader. Repeat this activity for the capabilities this leader would be responsible for.
3. Continue to define each role that will be required in that work unit to deliver or provide oversight related to those capabilities.
4. Continue until key roles are identified and the capabilities each role will be accountable or responsible for are clarified.
5. Remember, only one role can have accountability for each capability but several can have responsibility.
6. For each role, use the list of capabilities that the position will be accountable, responsible, or accountable and responsible for to create a job description. Leverage your own internal job descriptions or visit our Job Descriptions page.

Record the results in the Organizational Design Workbook

Delivery model for product or solution development

Can add additional complexity or clarity

• Certain organizational structures will require a specific type of resourcing model to meet expectations and deliver on the development or sustainment of core products and solutions.
• There are four common methods that we see in IT organizations:
• Functional Roles: Completed work is handed off from functional team to functional team sequentially as outlined in the organization’s SDLC.
• Shared Service & Resource Pools (Matrix): Resources are pulled whenever the work requires specific skills or pushed to areas where product demand is high.
• Product or System: Work is directly sent to the teams who are directly managing the product or directly supporting the requestor.
• Skills & Competencies: Work is directly sent to the teams who have the IT and business skills and competencies to complete the work.
• Each of these will lead to a difference in how the functional team is skilled. They could have a great understanding of their customer, the product, the solution, or their service.

Info-Tech Insight

Despite popular belief, there is no such thing as the Spotify model, and organizations that structured themselves based on the original Spotify drawing might be missing out on key opportunities to obtain productivity from employees.

Sources: Indeed, 2020; Agility Scales

There can be different patterns to structure and resource your product delivery teams

The primary goal of any product delivery team is to improve the delivery of value for customers and the business based on your product definition and each product’s demand. Each organization will have different priorities and constraints, so your team structure may take on a combination of patterns or may take on one pattern and then transform into another.

Delivery teams will be structured according to resource and development needs

Functional Roles	Shared Service and Resource Pools	Product or System	Skills and Competencies
When your people are specialists versus having cross-functional skills	Leveraged when specialists such as Security or Operations will not have full-time work on the product	When you have people with cross-functional skills who can self-organize around a product’s needs	When you have a significant investment in a specific technology stack

For more information about delivering in a product operating model, refer to our Deliver Digital Products at Scale blueprint.

3.4 Finalize the organizational chart

1-3 hours

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. Under each of the leadership roles, import the names of team members that were part of each respective work unit.
4. 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.

Record the results in the Organizational Design Workbook & Executive Communications Deck

Proactively consider and mitigate redesign risks

Every organizational structure will include certain risks that should have been considered and accepted when choosing the base operating model sketch. Now that the final organizational structure has been created, consider if those risks were mitigated by the final organizational structure that was created. For those risks that weren’t mitigated, have a tactic to control risks that remain present.

3.5 Identify and mitigate key risks

1-3 hours

1. For each of the operating model sketch options, there are specific risks that should have been considered when selecting that model.
2. Take those risks and transfer them into the correct slide of the Organizational Design Workbook.
3. Consider if there are additional risks that need to be considered with the new organizational structure based on the customizations made.
4. For each risk, rank the severity of that risk on a scale of low, medium, or high.
5. Determine one or more mitigation tactic(s) for each of the risks identified. This tactic should reduce the likelihood or impact of the risk event happening.

Record the results in the Organizational Design Workbook

Phase 4

Plan for Implementation & Change

This phase will walk you through the following activities:

4.1 Select a transition plan

4.2 Establish the change communication messages

4.3 Be consistent with a standard set of FAQs

4.4 Define org. redesign resistors

4.5 Create a sustainment plan

This phase involves the following participants:

• CIO
• IT Leadership
• Business Leadership
• HR Business Partners

All changes require change management

Embedding change management into organizational design

Implementing the new organizational structure

Implementing the organizational structure can be the most difficult part of the process.

• To succeed in the process, consider creating an implementation plan that adequately considers these five components.
• Each of these are critical to supporting the final organizational structure that was established during the redesign process.

Define the type of change the organizational structure will be

As a result, your organization must adopt OCM practices to better support the acceptance and longevity of the changes being pursued.

Info-Tech Insight

How you transition to the new organizational structure can be heavily influenced by HR. This is the time to be including them and leveraging their expertise to support the transition “how.”

Transition Plan Options

4.1 Select a transition plan approach

1-3 hours

1. List each of the changes required to move from your current structure to the new structure. Consider:
1. Changes in reporting structure
2. Hiring new members
3. Eliminating positions
4. Developing key competencies for staff
2. Once you’ve defined all the changes required, consider the three different transition plan approaches: big bang, incremental, and pilot. Each of the transition plan approaches will have drawbacks and benefits. Use the list of changes to inform the best approach.
3. If you are proceeding with the incremental or the pilot, determine the order in which you will proceed with the changes or the groups that will pilot the new structure first.

Record the results in the Organizational Design Workbook

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.

65% of managers believe the organizational change is effective when provided with frequent and clear communication.

Source: SHRM, 2021

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.

Five elements of communicating change

• What is the change?
• Why are we doing it?
• How are we going to go about it?
• How long will it take us to do it?
• What will the role be for each department and individual?

Source: Cornelius & Associates, 2010

4.2 Establish the change communication messages

2 hours

1. The purpose of this activity is to establish a change communication message you can leverage when talking to stakeholders about the new organizational structure.
2. Review the questions in the Organizational Design Workbook.
3. Establish a clear message around the expected changes that will have to take place to help realize the new organizational structure.

Record the results in the Organizational Design Workbook

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

Frequently asked questions (FAQs) provide a chance to anticipate concerns and address them

As a starting point for building an IT organizational design implementation, look at implementing an FAQ that will address the following:

• The what, who, when, why, and where
• The transition process
• What discussions should be held with clients in business units
• HR-centric questions

Questions to consider answering:

• 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?
• 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?

4.3 Be consistent with a standard set of FAQs

1 hour

1. Beyond the completed communications plans, brainstorm a list of answers to the key “whats” 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?
2. 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?
3. 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.

Record the results in the Organizational Design Workbook

The change reaction model

(Adapted from Cynthia Wittig)

Info-Tech Insight

People resist changes for many reasons. When it comes to organizational redesign changes, some of the most common reasons people resist change include a lack of understanding, a lack of involvement in the process, and fear.

Include employees in the employee development planning process

Prioritize

Assess employee to determine competency levels and interests.

Draft

Employee drafts development goals; manager reviews.

Select

Manager helps with selection of development activities.

Check In

Manager provides ongoing check-ins, coaching, and feedback.

Consider core and supplementary components that will sustain the new organizational structure

Supplementary sustainment components:

• Tools & Resources
• Structure
• Skills
• Work Environment
• Tasks
• Disincentives

Core sustainment components:

• Empowerment
• Measurement
• Leadership
• Communication
• Incentives

Sustainment Plan

Sustain the change by following through with stakeholders, gathering feedback, and ensuring that the change rationale and impacts are clearly understood. Failure to so increases the potential that the change initiative will fail or be a painful experience and cost the organization in terms of loss of productivity or increase in turnover rates.

Support sustainment with clear measurements

• Measurement is one of the most important components of monitoring and sustaining the new organizational structure as it provides insight into where the change is succeeding and where further support should be added.
• There should be two different types of measurements:
1. Standard Change Management Metrics
2. Organizational Redesign Metrics
• When gathering data around metrics, consider other forms of measurement (qualitative) that can provide insights on opportunities to enhance the success of the organizational redesign change.

1. Every measurement should be rooted to a goal. Many of the goals related to organizational design will be founded in the driver of this change initiative
2. Once the goals have been defined, create one or more measurements that determines if the goal was successful.
3. Use specific key performance indicators (KPIs) that contain a metric that is being measured and the frequency of that measurement.

Info-Tech Insight

Obtaining qualitative feedback from employees, customers, and business partners can provide insight into where the new organizational structure is operating optimally versus where there are further adjustments that could be made to support the change.

4.4 Consider sustainment metrics

1 hour

1. Establish metrics that bring the entire process together and that will ensure the new organizational design is a success.
2. Go back to your driver(s) for the organizational redesign. Use these drivers to help inform a particular measurement that can be used to determine if the new organizational design will be successful. Each measurement should be related to the positive benefits of the organization, an individual, or the change itself.
3. Once you have a list of measurements, use these to determine the specific KPI that can be qualified through a metric. Often you are looking for an increase or decrease of a particular measurement by a dollar or percentage within a set time frame.
4. Use the example metrics in the workbook and update them to reflect your organization’s drivers.

Record the results in the Organizational Design Workbook

Related Info-Tech Research

Build a Strategic IT Workforce Plan

• Continue into the second phase of the organizational redesign process by defining the required workforce to deliver.
• Leveraging trends, data, and feedback from your employees, define the competencies needed to deliver on the defined roles.

Implement a New IT Organizational Structure

• Organizational design implementations can be highly disruptive for IT staff and business partners.
• Without a structured approach, IT leaders may experience high turnover, decreased productivity, and resistance to the change.

Define the Role of Project Management in Agile and Product-Centric Delivery

• There are many voices with different opinions on the role of project management. This causes confusion and unnecessary churn.
• Project management and product management naturally align to different time horizons. Harmonizing their viewpoints can take significant work.

Research Contributors and Experts

Jardena London

Transformation Catalyst, Rosetta Technology Group

Jodie Goulden

Consultant | Founder, OrgDesign Works

Shan Pretheshan

Director, SUPA-IT Consulting

Chris Briley

CIO, Manning & Napier

Dean Meyer

President N. Dean Meyer and Associates Inc.

Jimmy Williams

CIO, Chocktaw Nation of Oklahoma

Info-Tech Research Group

Cole Cioran, Managing Partner

Dana Daher, Research Director

Hans Eckman, Principal Research Director

Ugbad Farah, Research Director

Ari Glaizel, Practice Lead

Valence Howden, Principal Research Director

Youssef Kamar, Senior Manager, Consulting

Carlene McCubbin, Practice Lead

Baird Miller, Executive Counsellor

Josh Mori, Research Director

Rajesh Parab, Research Director

Gary Rietz, Executive Counsellor

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Appendix

IT Culture Framework

This framework leverages McLean & Company’s adaptation of Quinn and Rohrbaugh’s Competing Values Approach.