Using Organizational Best Practices to Handle Cloud and New Technologies

I have extended and updated this post which was first published in InformationWeek in March, 2013. I think it is a very salient and pragmatic organizational method for IT success. I look forward to your feedback! Best, Jim

IT organizations are challenged to keep up with the latest wave of cloud, mobile and big data technologies, which are outside the traditional areas of staff expertise. Some industry pundits recommend bringing on more technology “generalists,” since cloud services in particular can call on multiple areas of expertise (storage, server, networking). Or they recommend employing IT “service managers” to bundle up infrastructure components and provide service offerings.

But such organizational changes can reduce your team’s expertise and accountability and make it more difficult to deliver services. So how do you grow your organization’s expertise to handle new technologies? At the same time, how do you organize to deliver business demands for more product innovation and faster delivery yet still ensure efficiency, high quality and security?

Rather than acquire generalists and add another layer of cost and decision making to your infrastructure team, consider the following:

Cloud computing. Assign architects or lead engineers to focus on software-as-a-service and infrastructure-as-a-service, ensuring that you have robust estimating and costing models and solid implementation and operational templates. Establish a cloud roadmap that leverages SaaS and IaaS, ensuring that you don’t overreach and end up balkanizing your data center.

For appliances and private cloud, given their multiple component technologies, let your best component engineers learn adjacent fields. Build multi-disciplinary teams to design and implement these offerings. Above all, though, don’t water down the engineering capacity of your team by selecting generalists who lack depth in a component field. For decades, IT has built complex systems with multiple components by leveraging multi-faceted teams of experts, and cloud is no different.

Where to use ‘service managers’. A frequent flaw in organizations is to employ ‘service managers’ who group multiple infrastructure components (e.g. storage, servers, data centers, etc) into a ‘product’ (e.g. ‘hosting service’) and provide direction and interface for this product. This is an entirely artificial layer that then removes accountability from the component teams and often makes poor ‘product’ decision because of limited knowledge and depth. In the end IT does not deliver ‘hosting services’; IT delivers systems that meet business functions (e.g., for banking, teller or branch functions, ATMs; or for insurance, claims reporting or policy quote or issue). These business functions are the true IT services and are where you should apply a service manager role. Here, a service manager can ensure end-to-end integration and quality, drive better overall transaction performance and reliability, and provide deep expertise on system connections and SLAs and business needs back across the application and infrastructure component teams. And because it is directly attached to the business functions to be done, it will yield high value. These service managers will be invaluable for both new development and enhancement work as well as assisting during production issues.

Mobile. If mobile isn’t already the most critical interface for your company, it will be in three to five years. So don’t treat mobile as an afterthought, to be adapted from traditional interfaces. And don’t outsource this capability, as mobile will be pervasive in everything you build.

Build a mobile competency center that includes development, user experience and standards expertise. Then fan out that expertise to all of your development teams, while maintaining the core mobile group to assist with the most difficult efforts. And of course, continue with a central architecture and control of the overall user experience. A consistent mobile look, feel and flow is essentially your company’s brand, invaluable in interacting with customers.

Big data. There are two key aspects of this technology wave: the data (and traditional analytic uses) and real-time data “decisioning,” similar to IBM’s Watson. You can handle the data analytics as an extension of your traditional data warehousing (though on steroids). However, real-time decisioning has the potential to dramatically alter how your organization specifies and encodes business rules.

Consider the possibility that 30% to 50% of all business logic traditionally encoded in 3 or 4 generation programming languages instead becomes decisioned in real time. This capability will require new development and business analyst skills. For now, cultivate a central team with these skills. As you pilot and determine how to more broadly leverage real-time data decisioning, decide how to seed your broader development teams with these capabilities. In the longer run, I believe it will be critical to have these skills as an inherent portion of each development team.

Competing Demands. Overall, IT organizations must meet several competing demands: Work with business partners to deliver competitive advantage; do so quickly in order to respond to (and anticipate) market demands; and provide efficient, consistent quality while protecting the company’s intellectual property, data and customers. In essence, there are business and market drivers that value speed, business knowledge and closeness at a reasonable cost and risk drivers that value efficiency, quality, security and consistency.

Therefore, we must design an IT organization and systems approach that meets both sets of drivers and accommodates business organizational change. As opposed to organizing around one set of drivers or the other, the best solution is to organize IT as a hybrid organization to deliver both sets of capabilities.

Typically, the functions that should be consolidated and organized centrally to deliver scale, efficiency and quality are infrastructure (especially networks, data centers, servers and storage), IT operations, information security, service desks and anything else that should be run as a utility for the company. The functions to be aligned and organized along business lines to promote agility and innovation are application development (including Web and mature mobile development), data marts and business intelligence.

Some functions, such as database, middleware, testing and project management, can be organized in either mode. But if they aren’t centralized, they’ll require a council to ensure consistent processes, tools, measures and templates.

For services becoming a commodity, or where there’s a critical advantage to having one solution (e.g., one view of the customer for the entire company), it’s best to have a single team or utility that’s responsible (along with a corresponding single senior business sponsor). Where you’re looking to improve speed to market or market knowledge, organize into smaller IT teams closer to the business. The diagram below gives a graphical view of the hybrid organization.

The IT Hybrid Model diagram
With this approach, your IT shop will be able to deliver the best of both worlds. And you can then weave in the new skills and teams required to deliver the latest technologies such as cloud and mobile. You can read more about this hybrid model in our best practice reference page.

Which IT organizational approaches or variations have you seen work best? How are you accommodating new technologies and skills within your teams? Please weigh in with a comment below.

Best, Jim Ditmore

About Jim D

Jim has worked in the IT field for over 25 years and as a senior leader for over 15 years. He has successfully turned around a number of IT shops to become high performing teams and a competitive advantage for their companies.

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One Response to Using Organizational Best Practices to Handle Cloud and New Technologies

  1. Victor M says:

    Hi Jim,

    Thank you for the good analysis and insights in the crucial topics of IT organization and IT services. What interested me most are the suggestions of “Service Manager” and IT Hybrid Model, here a couple thoughts:

    1. Talent and positions are critical elements of organization design, and you are spot on – that a Service Manager will be invaluable when he/she “is directly attached to the business functions to be done”, and at the same time who can also ensure and drive end-to-end integration and quality service delivery. I have heard similar advocates or value propositions for roles like a Project Manager, Product or Release Manager… In any case, such composite talent / leader are rare in existence, and I was wondering if you can share more thoughts on how IT organization may recruit and/or develop it internally?

    2. The IT Hybrid Model outlines a balanced and flexible IT organization structure to better meet competing business demands, it is a good and solid first step. I hope you may have more follow up blogs to continue build and expand on the IT organization design and operation on top of this model; and one of the specific areas may worth further discussion is around the Methodology / Framework, which is critical in helping IT leaders effectively govern and integrate those individual IT services / functions / teams in a hybrid model, therefore to provide superb results and user experience. Project Management, ITIL/ITSM, and Enterprise Architecture are a few popular choices, but many large IT organizations struggled with multiple half-hearted implemented, fragmented and disjointed frameworks…

    Again, looking forward for your further thoughts and analysis.


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