High-Performance IT - Organizational Structure

1. IT Management Pains and Gains

Traditional IT management model

Virtually all IT departments are managed along the lines of the Traditional management model, a hierarchical command and control structure first introduced during the Industrial Revolution of the 1880s. Progressive IT departments have realised that this hierarchical model is obsolete, being too rigid in a modern business environment that calls for greater agility. These organizations are moving to newer management models such as Transformational, High-Performance and are changing their IT teams to become High-Performance Teams.

Traditional IT management model.

A standard hierarchal organization chart view, with the CIO as the department head and an executive management team, is made up of IT managers each of whom manages a specific IT function.

This model has some significant failings.

This model in practice, due to its structure, strongly influences management practices, communications and inter-team working relationships. This model also reinforces a technology first and customers second attitude with little consideration of IT staff needs. The model has the following noteworthy problems.

· The CIO has an increased focus on operational matters and less on strategic business needs.

· It promotes IT functions as silos.

· Communications lines can tend to follow the hierarchical lines of the model.

· The IT management executive does not have a departmental/macro view of performance and productivity.

· It enforces IT team operational boundaries; it blinkers IT managers to predominantly see only their IT function.

· Shared work activities are much more chaotic due to siloed operations.

· Staff and customer satisfaction levels are predominantly lower.

· IT functional integration, the single most important thing that makes IT work – is chaotic.

· Staff have a transactional approach to work, that is – they are task orientated.

High-Performance IT management model

The High-Performance IT model is a progressive management model consisting of Transformational management (CIO and direct reports) and high-performance teams. It is designed to engage all of the executive team in the management of performance and productivity across the whole of the IT department. The structure is flat, and teams are self-organizing. The Service Desk is at the centre of the model as it controls the departments Workload Management processes, performance reporting and it exerts a strong influence over inter-team communications. The model fully separates the management of projects away from operational activities. The IT executive team practices shared leadership, mutual accountability, psychological safety, open communication, and team member engagement giving it its Transformational and High-Performance management characteristics.

High-Performance IT management model.

This model has some significant benefits.

· The model is all about performance and productivity excellence, placing customers’ needs first, IT staff second and technology third.

· Key performance metrics are customer satisfaction, staff satisfaction, job completion rates, failure rates, quality, service delivery and process adherence.

· It provides the IT executive with a departmental macro view of performance, allowing IT managers to share productivity outcomes, failures, and successes.

· Inter-team integration is significantly improved with formalised communication lines and touchpoints.

· The value and quality of information exchanged at these touchpoints is dramatically improved and silos are broken down.

· IT teams are highly organized under this model and performance is measured.

· This model can produce operational (day to day activities excluding projects) human resource savings of up to 30%.

· Displaced operational human resources are redirected to business projects with associated cost savings.

· Staff and customer satisfaction levels are considerably higher.

High-Performance IT – resource model

It is often the case that an IT department is resource bottom-heavy, by that I mean it has more resources working at the bottom of its delivery framework than at the top. Consider the ‘Inverted Triangles’ model below. I use this to demonstrate the allocation of IT resources, where most of ITs costs sit, where most effort takes place, and where most of IT’s deliverables come from. Before the rollout of High-Performance IT, most departments look like the triangle on the left. Most resources are deployed in maintenance (high cost, low business value, recurring activities) than in strategic (lower cost, high business value) activities.

After High-Performance IT has been rollout out the triangle is inverted, moving from the left to the right. Resources are deployed to where they are needed most, namely strategic projects that for the business means growth, cost savings, market penetration and profits and for IT, cost savings, ability to do more with less, stability, risk reduction and technological leadership.

IT executive stress

Traditional management practices mean that the IT executive management experience is typically poor, team members look to assign blame for failures, they lack trust and do not have mutual accountability or shared leadership. They are constantly managing change with little opportunity to recover and relax before the next change is upon them. Add to this, a lack of tight inter-team integration causes poor workflows, high error rates, delayed delivery times and use of overlapping and redundant processes and standards – all these combined, result in the relentlessly high executive team and staff stress levels.

Lack of business focus

The most common complaint about IT and a major source of stress is that IT is not business focussed or business-friendly. There are two causes of this: 1, most IT staff simply do not have business training, business experience or knowledge and are therefore largely incapable of appreciating what the business does or what its priorities are. They also fail to understand that IT does not pay their salaries, the business does; and they also fail to appreciate that IT is a business service and support function, that it does not generate corporate revenues, rather it is a business cost. 2, IT does not recognize that business needs are always priority one and that IT needs are priority two. This is a key lesson that many IT managers and their staff need to learn. High-Performance IT trains the IT executive that their everyday priorities are business first, IT staff second and technology third.

Lack of business trust and partnership

IT often complains that the business does not follow IT process or deliver what’s been agreed and that the business constantly expects unplanned work to be delivered in short, unrealistic timeframes. On the other side of the coin, the business does not trust that IT will deliver as promised, often able to cite a litany of letdowns. The real issue here is that IT is not part of the business planning process. (IT thinks it should be the other way around.) High-Performance IT embeds an IT person into the business planning process (yes – Mohammed must go to the mountain) so that business intentions and requirements are known about early. Under High-Performance IT this person is called a Business Liaison Officer – an IT middle or senior manager that joins business planning meetings as an observer and all going well as a contributor. Sold the right way, most business units see the sense in this.

High-Performance IT manages the business relationship as a joint venture. It recognises that delivering faster results is held back by the need for arm’s-length formality, where IT “negotiates” service-level agreements while requiring its business “customers” to “sign off on requirements and specifications,” as against informal conversations that start with, “What are you trying to accomplish and how can we help you?”

At one time I called the formal approach “best practice.” but not anymore. IT is better placed and better served by getting into bed with the business and fostering strong informal and formal relationships, with the objective of avoiding the need to negotiate everything. Why? Because firstly the customer is always right and secondly negotiation is for people sitting on opposite sides of the table. If IT talks to the business as a partner and is aware of business needs early enough, then there is plenty of room for compromise and mutually beneficial outcomes.

The problem of shadow IT

Shadow IT is simply business built and deployed IT solutions that cause a myriad of support and integration problems for IT. Shadow IT is made up of islands of automation, often built on shabby foundations with IT called in to fix things when they go wrong. A classic example of this is business applications built on large numbers of spreadsheets, simple databases, or cheap, poorly supported applications because the business need was so great it could not wait for an IT solution.

Shadow IT unfailingly does what the business wants, the business doesn’t have to wait for an IT governance process to give a green light, it simply gets what it needs now. High-Performance IT views Shadow IT implementations as free sources of (outsourced) application teams - plus these teams mostly have great business analysts, something every IT department can’t get enough of. High-Performance IT considers three options for dealing with these Shadow IT teams: 1, extend the IT Architecture over them to cover their activities, providing support and guidance to the Shadow IT developers. 2, deliver in the required business timeframes eliminating the need for these Shadow teams. 3, take over the management of the Shadow IT systems – which is usually the preferred solution.

Budget overruns

I have yet to encounter an IT department that has control of its budget, by that I mean that all expenses are within budget constraints – no overruns. High-Performance IT uses a funding model where the IT budget pays for business unit ‘shared services’, (spreading this cost to business units based on a number of desktops or user seats) but the business units fund capital and operational costs of new projects with adjustment to the IT budget for ongoing post-project-related costs. (e.g., depreciation and maintenance.)

High-Performance IT also carries out a detailed equipment, services, and agreements audit, that is, everything that comprises an IT budget. The budget is remade based upon the audit results with Workload Management processes (that manage cost allocations) being implemented by the Service Desk at the same time.

Low customer and staff satisfaction levels

The biggest problem with low customer satisfaction levels is that users lose faith in IT’s ability to provide quality solutions and to fix problems in a timely manner causing in some cases users to stop reporting problems altogether. This encourages users to try to find their own IT solutions (Shadow IT) and fix their own problems (e.g., misusing Application data fields). High-Performance IT uses Service Desk Workload Management information and regular customer surveys as a source of information as to how well IT is performing.

The problems with low staff satisfaction levels are reduced personal accountability for work, higher than normal incidences of wilful blindness and increased staff turnover with associated loss of IT memory. High-Performance IT fixes these issues by surveying the staff, making the IT executive team accountable for publishing then addressing the survey results, bringing all staff training up to date and finally by introducing high-performance people leadership practices such as psychological safety, open communication, and team member engagement.

Service delivery issues

Most Service Delivery issues centre around incorrect billing, late delivery times, failed installations, the need for rework, out of date standards and constant maintenance. These issues are basically due to the use of redundant or poor process (or no process at all) and a failing or failed Service Desk Workload Management process - namely Gating, Work Management and Work Classification. High-Performance IT completely reworks the Service Desk Workload Management process and implements strict rules for its management and engagement. These rules are so strict that failure to follow them can be a sackable offence.

2. IT Teams

Traditional IT teams

The use of teams today has become commonplace driven by the need to be more competitive and driven by changes in business technology. Current team organisational structures have not changed much since the 1960’s when IT and Accounting departments were the first two business areas to make use of teams. These teams still have severe limitations: - they tend to be silo-based, hierarchical, facilitate only existing skill sets, are almost exclusively project-driven, have fixed boundaries and are naturally chaotic in nature and behaviour.

Traditional teams have long been part of the organizational chart, with team leaders holding a formal role in an organization’s governance hierarchy with the team there to support them. Teams have been modelled on the Traditional management model consisting of individuals from the same business unit, while those working in other units play for other teams. This has been true whether the organization design is process-, function-, segment-, or product-based. The most Traditional type of IT team is the manager-led team. Within this team, a manager fits the role of the team leader and is responsible for defining the team goals, methods, and functions. The remaining team members are responsible for carrying out their assigned work under the monitoring of the manager.

Traditional IT teams rely on strict lines of authority and accountability to govern their operation and are built on highly optimized (but static and difficult-to-change) processes designed for scalable efficiency. This is business conceived as mass production - problems are decomposed into well-defined tasks, each assigned to a specialist who has authority and autonomy within their specialization, while interactions between specialists are tightly defined. Most IT departments are managed according to the Traditional team’s management model, that is, a hierarchical, command and control structure with team structures following that model. For IT, this Traditional management and teams model looks something like this.

Traditional IT teams suffer from a range of common dysfunctions making a cohesive team difficult if not impossible to achieve.

· Lack of commitment and avoidance of accountability.

· Lack of mutual trust. Team members do not fully trust each other or the team as an entity.

· Inability to manage conflict. Not dealing with conflict openly and transparently.

· Nonparticipating leadership. Team members fail to use a democratic leadership style that involves and engages all team members.

· Poor decision-making. Team members make decisions too quickly without a blend of rational and intuitive decision-making methods.

· Diversity not valued. Team members do not value the diversity of experience and backgrounds of their fellow team members, resulting in a lack of diverse viewpoints and less successful decision-making and solutions.

· Lack of goal clarity. Team members are unsure about their roles and the ultimate team goals, resulting in a lack of commitment and engagement.

· Poorly defined roles and responsibilities. Team members are not clear about what they must do (and what they must not do) to demonstrate their commitment to the team and to support team success.

· Relationship issues. The bonds between the team members are weak, which affects their efficiency and effectiveness.

· Negative atmosphere. An overall team culture that is not open, transparent, positive, and future-focused results in a failure to perform at high levels.

To quickly ascertain to what extent your team suffers from these dysfunctions, ask yourself these five simple questions.

· Do team members openly and readily disclose their opinions?

· Are team meetings compelling and productive?

· Does the team come to decisions quickly and avoid getting bogged down by consensus?

· Do team members confront one another about their shortcomings?

· Do team members sacrifice their own interests for the good of the team?

High-Performance IT teams

Organizations are responding to the challenges they face today by forming cross-silo, cross-functional and cross-organization teams, deconstructing fixed organizational structures by breaking up functional domains, separating teams from Traditional management structures so that they can pull together the diverse skill sets and perspectives these challenges require. However, the consequence of this deconstruction is that documented reporting lines and functional or geographical divisions are becoming increasingly disconnected from how work is done.

Cross-functional teams often fail because the organization lacks a systemic approach. Teams are hurt by unclear governance, a lack of accountability, goals that lack specificity, and by organizations' failure to prioritize the success of cross-functional projects. In some cases, specialist teams are being deployed to address innovation challenges and in-demand technical expertise (a growing IT trend, though the approach is not new). It is also becoming more common for organizations to maintain pools of employees without operational roles, who instead work on an endless series of projects and innovation challenges. In this environment - where companies are moving beyond Traditional structures and there is recognition that rigid boxes and lines do not reflect the reality of work, it’s useful to think of the contemporary organization as a team of teams.

Today’s teams are different from the teams of the past. They’re far more diverse, dispersed, digital, and dynamic, but still suffer from common team dysfunctions.

· To move projects across team lines quickly without sacrificing quality for speed is a challenge.

· They are unable to rapidly respond to changing business technologies and the need to be more competitive and they do not employ progressive management styles, team behaviours or work practices.

· They are largely incapable of genuine innovation due to their inability to constructively harness conflict and they do not practice advanced communication methods.

· They are poor at creativity and their contribution to corporate growth is rarely defined and is therefore difficult to measure.

High-Performance IT Teams do not suffer from these limitations. People are highly skilled and can interchange their roles; management of the team is not vested in a single individual. Instead, the leadership role is taken up by different team members according to the need at the time. High-Performance IT corrects these dysfunctions and improves team performance and productivity by converting Traditional and Contemporary IT teams to high-performance IT teams.

“The challenges confronting organizations today are more complex than those in the past. They cut across operational and organizational groups rather than being focused within one. Globalization and the development of online markets have enabled organizations to address a global wealth of niches rather than single geography. At the same time, the technology providing this global reach is enabling firms to unbundle themselves, transforming the vertically integrated enterprises that characterized much of the Industrial Revolution into an ecosystem of suppliers and partners, with the organization at the centre.

This unbundling unlocks cost efficiencies and agility but is in tension with customer behaviour, as customers are increasingly coming to expect a coherent, joined-up experience during their buying journey as they skip between locations, media, geographies, and channels, regardless of which member of the organization’s ecosystem they’re interacting with. The digital business environment also has lowered barriers to entry and enables innovation to travel faster, driving organizations to become more agile so that they can react to the problems and opportunities they encounter in a timely manner—no easy feat when dealing with the many partners and suppliers inherent with a modern business, and the contractual inertia that this creates.” Source: Peloton and teams.

The image below shows a High-Performance IT team structure (flat, self-managing, internal team vision, psychologically safe, engaged, mutually accountable team members with highly developed interpersonal skills). High-Performance IT trains the IT executive team in the High-Performance Management style, this then enables them to build high-performance teams which cannot exist under a Traditional manager but which can co-exist alongside Traditional teams.

High-Performance IT Team building stresses ITs priorities, namely business priority one, IT staff priority two, technology priority 3 and it teaches how to form business relationships more as joint ventures. Another outcome is that IT budgets are better constructed and there is a lower IT spend, reduced staff turnover means better retention of IT memory and overall customer and staff satisfaction levels noticeably increase.