Mix and Match

By V. Sambamurthy  |  Posted 12-01-2001 Print Email

Mix and Match

A study revealed seven possible options for IT organizations:

Centralized
Top-down responsibility for solutions delivery, conceptualizing, developing and implementing IT solutions for all parts of the business.

PRO

  • Economizes on IT skill needs
  • Reduces coordination overhead within IT

CON

  • Weaker client relationships
  • Ineffective development of business area knowledge and expertise
  • May inhibit customization of IT to strategic business needs

GOOD FOR: Small firms with a lean IT staff and related lines of business

Centralized, aligned through role
Single solutions delivery component with additional account manager role.

PRO

  • Improved client relationships
  • Improved focus on strategic business needs

CON

  • Dedicated staff needed for account manager role
  • Challenges in implementing account manager role
  • Coordination overhead between account manager and solutions delivery teams

GOOD FOR: Small firms with a lean IT staff and somewhat differentiated lines of business

Centralized, aligned through mirror-image unit
Multiple solutions delivery groups aligned with different lines of business, but still part of the overall IT organization.

PRO

  • Customization of IT to strategic business needs
  • Improved client relationships

CON

  • Expanded need for IT staff
  • Reduced ability to leverage across business units
  • Limits on customization of IT to strategic business needs

GOOD FOR: Medium- to large-scale organizations with relatively undifferentiated lines of business, but with a greater customization need

Federal
Multiple solutions delivery groups aligned with the varied lines of business. These groups report into the line of business as well as into the IT organization. Coordination achieved through IT manage-ment and executive councils.

PRO

  • Balance between local innovation and enterprise coordination
  • Customization of IT to strategic business needs
  • Appropriate for leveraging cross-unit synergies

CON

  • Complex coordination challenges due to dual reporting relationships
  • High administrative and staff costs

GOOD FOR: Medium- to large-scale firms with differentiated business units

Decentralized
Solutions delivery groups aligned with the different lines of business. These groups report directly into the business units and have a dotted-line relationship with the CIO. Coordination achieved through IT management and executive councils.

PRO

  • Enhanced customization of IT to strategic business needs
  • Greater business unit ownership of IT initiatives

CON

  • Limits to enterprise opportunities for IT leverage
  • Greater total cost of IT operations

GOOD FOR: Large firms with differentiated lines of business

Independent subsidiary
IT function structured as a separate unit with the mandate to be the firm's preferred IT provider of choice, while also looking to sell IT services to other business firms. The CIO also serves as president of the IT business unit.

PRO

  • Attention to "profit-and-loss" mentality toward IT operations
  • Greater visibility of the costs and benefits of IT services
  • Opportunities for commercializing IT assets and services to generate revenue

CON

  • Commercial focus could distract the IT function from internal client relationships

GOOD FOR: Firms of all sizes where corporate philosophy focuses on cost accountability

Outsourced
Most, if not all, IT activities are performed outside the boundary of the firm. The internal IT organization retains aspects of the overall strategic visioning and coordination of IT efforts.

PRO

  • Cost economies and flexibility of IT operations
  • Ability to leverage specialized competencies of external partners

CON

  • Strategic vulnerability to alliance partner
  • Premium on contracting and relational skills

GOOD FOR: Firms of all sizes guided by management's philosophy regarding external ownership of IT



 

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