There is a disease that afflicts IT Organizations in most major corporations. Any organization with separate divisions – or business units or whatever the gurus are calling them these days – is likely to have it.
There is a disease that afflicts IT Organizations in most major corporations. Any organization with separate divisions – or business units or whatever the gurus are calling them these days – is likely to have it.
The disease is severe in organizations that have come to be as a result of multiple acquisitions. These organizations leave the acquired company’s structure intact with the head – President or divisional CEO or whatever they prefer being called – reporting to the “corporate” CEO. So the IT department in the acquired company still reports to the division head but is dotted lined to the corporate CIO.
The disease is diminished but still significant in those organizations that experimented with de-centralizing IT or aligning it more closely with “business units.” Remember the management craze about “Strategic Business Units?” Many large companies broke up into these SBUs. The Presidents/CEOs of these SBUs wanted their IT Chiefs to report to them. The IT Chiefs were then dotted lined to the corporate CIO.
Can someone create a better recipe for disaster? Let me explain.
But first, we need a name for this affliction. Well, whatever the genesis, let us call it the “multiple fiefdoms disorder”. We could have called it the “many chiefs disease” but that would not do justice to its destructive ability.
Now, let us look at this disaster up close. Multiple chiefs mean multiple directions – inconsistent, duplicate, incoherent…whether knowingly or unwittingly, these chiefs are working at cross purposes. And even when they are not, they are not furthering the organization’s agenda because, mired in their own little SBU world, they do not know what it is!
In an organization afflicted by this disease, nothing works well. It is neither efficient nor effective. It is exacerbating the fundamental business/IT misalignment in ways we cannot even imagine. What is worse is that it is a hotbed of politics that creates demoralized IT employees. This perfect storm then creates a vicious cycle that fuels a perpetual and exponential decline in IT value and a revolving door of IT employees – remember mentally checking out is worse than physically leaving!
As CIO you are adept at herding cats or you would not be in your position long. You should be able to herd these internal cats well. Think again!
Each of these IT heads thinks of themselves as CIO – albeit of a smaller fiefdom. As they should! Wasn’t the whole idea to create a divisional CIO closely aligning that business’ needs with its IT capability? So aren’t these “IT heads” CIOs of their division every sense of the word?
Now, let us ask ourselves a rhetorical question: why do these divisional CIOs need the corporate CIO? Therein lies the root of the corporate CIOs problem. Herding these cats is not just difficult, it is impossible because you know that, in this design, the corporate CIO role is an unnecessary add-on.
So should we get rid of the corporate CIO? It depends!
This topic can take a whole book but our time together is limited so let’s make the most of it. The idea behind centralization is driven by “standardization” enabled forces of “efficiency” – speed to market and economies of scale. The force behind de-centralization is driven by “business alignment” enabled forces of “effectiveness” – responsiveness to business needs.
These forces need to be balanced. And believe me they balance perfectly on paper. It is in the real world where human dynamics kick in that destruction follows – these corporations are a picture of civilized chaos. Everyone is polite to each other and misconstrues that as “collaboration”. But make no mistake; the blood letting is no less than in the most barbaric of wars.
It is not the design but the dynamic that creates the destruction. A lot of wasted time and effort duplicating things and when you are not then obstructing things others are doing. One-upmanship like never seen before. A band with each member marching to a different tune or a choir with each member singing off a different page is bad enough. Now imagine the members wanting to do a “good job” in their own special way! Get the picture?
Who cares? The shareholders do or should! They did not sanction nor will condone this waste if they knew.
If you have created one single organization then it MUST have a single business strategy – not a strategy by each division. You must have a single IT Strategy and a single IT Organization implementing it. Go with centralized IT. Long live the Corporate CIO!
If you have a portfolio of fundamentally divergent businesses that have little in common then you have, by definition, a business strategy for each of these SBUs. It follows then that each of them needs their own IT Strategy and IT Organization. Go with decentralized IT – completely decentralized with no need for a corporate CIO. Long live divisional CIOs!
But wait, there is a better mouse-trap – the process driven organization! Is your organization smart enough to design such an organization? Is it mature enough to live with it?
The onus of making sure the correct IT organization design is implemented is, as always, with the captain of the ship – the CEO.
