Oc Cio Roundtable Oct 2009 Final


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Oc Cio Roundtable Oct 2009 Final

  1. 1. OC CIO Roundtable Oct 2009 The Changing Landscape of IT Organizations
  2. 2. Presentation Goals/Questions to answer/Take aways <ul><li>What is/will be affecting the way IT is organized? </li></ul><ul><li>Does the way IT is organized have an impact on how the value of IT is perceived? </li></ul><ul><li>How will you handle it and how will it affect the role of CIO? </li></ul>
  3. 3. Thoughts on organizations <ul><li>A corporation is a living organism; it has to continue to shed its skin. Methods have to change. Focus has to change. Values have to change. The sum total of those changes is transformation. Andrew Grove # (Intel) </li></ul><ul><li>We can lick gravity, but sometimes the paperwork is overwhelming - Wernher von Braun. </li></ul>Yet no matter how organized…
  4. 4. Topics <ul><li>Organization Styles - Structure types, Centralized vs. Decentralized </li></ul><ul><li>Macro Impacts on the Organizations </li></ul><ul><ul><li>Technology impact </li></ul></ul><ul><ul><li>Economic cycle impact </li></ul></ul><ul><ul><li>Workforce Demographics </li></ul></ul><ul><li>Can Best Practices be Found? </li></ul><ul><li>Emergence of the CIO </li></ul><ul><li>OC CIO Survey results </li></ul><ul><li>Take - Aways </li></ul>
  5. 5. Considerations when discussing Organizations ….. <ul><li>Credit is drawn upwards, but problems are pushed downwards. Anonymous </li></ul><ul><li>Albrecht's Law - Intelligent people, when assembled into an organization, will tend toward collective stupidity. Karl Albrecht (German born entrepreneur) </li></ul>
  6. 6. Organization Structure – Here’s the OD Theory <ul><li>Organizational structure - is the formal system of task and reporting relationships that controls, coordinates, and motivates employees so that they cooperate to achieve an organization's goals. </li></ul><ul><ul><li>Your task as a manager is to create an organizational structure and culture that: </li></ul></ul><ul><ul><ul><li>Encourages employees to work hard and to develop supportive work attitudes </li></ul></ul></ul><ul><ul><ul><li>Allows people and groups to cooperate and work together effectively. </li></ul></ul></ul><ul><ul><li>Structure and culture affect: </li></ul></ul><ul><ul><ul><li>Behavior </li></ul></ul></ul><ul><ul><ul><li>Motivation </li></ul></ul></ul><ul><ul><ul><li>Performance </li></ul></ul></ul><ul><ul><ul><li>Teamwork and cooperation </li></ul></ul></ul><ul><ul><ul><li>Intergroup and Interdepartmental relationships </li></ul></ul></ul><ul><li>What bearing does organizational design have on organizational behavior? </li></ul><ul><ul><li>The way a structure or culture is designed or evolves over time affects the way people and groups behave within the organization. </li></ul></ul><ul><ul><li>Once an organization decides how it wants its members to behave, what attitudes it wants to encourage, and what it wants its members to accomplish, it can then design its structure and encourage the development of the cultural values and norm to obtain these desired attitudes, behaviors, and goals. </li></ul></ul>
  7. 7. Organization Structure – Here’s the OD Theory <ul><li>How does an organization determine which attitudes and behaviors a encourage? </li></ul><ul><ul><li>An organization bases these design decisions on the contingencies it faces (a contingency is any event that might possibly occur and thus must be taken into account in planning). </li></ul></ul><ul><li>The three major contingencies that determine what kind of structure and culture an organization designs: </li></ul><ul><ul><li>Organization's environment </li></ul></ul><ul><ul><li>Technology an organization uses </li></ul></ul><ul><ul><li>Organization's strategy. </li></ul></ul>
  8. 8. Organization Styles - Hierarchical <ul><li>A hierarchical organization is structured in such a way that every entity in the organization, except one, is subordinate to a single other entity. This is the dominant mode of organization among large organizations; most corporations, governments, and organized religions are hierarchical organizations. </li></ul><ul><li>Pros: </li></ul><ul><ul><li>Hierarchical orgs are the foundation of every org – whether expressed or hidden </li></ul></ul><ul><ul><li>Authority and responsibility can be more clearly defined. </li></ul></ul><ul><ul><li>More specialist talent involved. Loyalty within straight line structure </li></ul></ul><ul><li>Cons: </li></ul><ul><ul><li>Decision making can be silo’d not representative </li></ul></ul><ul><ul><li>Can be slow to react to changing conditions/customer needs </li></ul></ul><ul><ul><li>Communication can get distorted through varied layers </li></ul></ul>
  9. 9. Organization Styles - Matrix <ul><li>Definition 1: Matrix Management is a type of organizational management in which people with similar skills are pooled for work assignments. In IT, this can be having the IT function report straight line to the CIO, with either local level or specific project groups report dotted line to a plant or function head. </li></ul><ul><li>Pros: </li></ul><ul><ul><li>Allows team to share information across task boundaries. </li></ul></ul><ul><ul><li>Allows for specialization that can increase depth of knowledge and allow professional development and career progression to be managed. </li></ul></ul><ul><li>Cons: </li></ul><ul><ul><li>Employees can become confused due to conflicting loyalties. </li></ul></ul><ul><ul><li>Some opinions that it is an outdated method to organize a company. [1] </li></ul></ul><ul><ul><li>Possible to double the number of managers when compared to line management, and as the time to reach a decision increases with the number of managers the result is an increase in management overhead expenses by more than a factor of two. </li></ul></ul>
  10. 10. Org Styles - Flat <ul><li>Flat organization (also known as horizontal organization ) </li></ul><ul><ul><li>Fewer levels of management, </li></ul></ul><ul><ul><li>Workers empowered to make decisions </li></ul></ul><ul><ul><li>Fewer differences in responsibility (not in pay) across levels </li></ul></ul><ul><ul><li>Due to: </li></ul></ul><ul><ul><ul><li>need for speed, which makes it helpful to empower employees to make decisions, which means fewer managers are needed </li></ul></ul></ul><ul><ul><ul><li>changes in information technology mean less need for the communication and control functions of middle managers </li></ul></ul></ul><ul><ul><ul><li>globalization means intensified competition, which increases the need to cut costs </li></ul></ul></ul><ul><li>This structure is generally possible only in smaller organizations or individual units within larger organizations. </li></ul><ul><li>When they reach a critical size, organizations can retain a streamlined structure but cannot keep a completely flat manager-to-staff relationship without impacting productivity . </li></ul><ul><li>Certain financial responsibilities may also require a more conventional structure. Some theorize that flat organizations become more traditionally hierarchical when they begin to be geared towards productivity. </li></ul><ul><li>Bill Gates: Keep a flat organization in which all issues are discussed openly. </li></ul>
  11. 11. Org Styles - Flat <ul><li>Pros: </li></ul><ul><ul><li>The flat organization model promotes employee involvement through a decentralized decision making process. </li></ul></ul><ul><ul><li>Expected response to customer feedback can thus become more rapid. Since the interaction between workers is more frequent, this organizational structure generally depends upon a much more personal relationship between workers and managers. </li></ul></ul><ul><li>Cons </li></ul><ul><ul><li>This structure can be more time-consuming to build than a traditional bureaucratic / hierarchical model . </li></ul></ul><ul><ul><li>Can become unwieldy, mixed message, without strong relationship involvement </li></ul></ul>
  12. 12. Organization Style - Federated <ul><li>Large IT shops </li></ul>
  13. 14. Organization - ICC
  14. 15. Centralized vs. Decentralized <ul><li>According to a recent Cutter Consortium survey, most IT organizations utilize either a centralized (45%) or a combination of centralized and decentralized (48%) governance structures. </li></ul><ul><li>In recent years, Gartner has observed a consistent trend toward minimizing the number of application /data center instances within any given enterprise. The corresponding change in IT organizations has followed. Influencing factors: </li></ul><ul><ul><li>It's more expensive to build, operate and maintain multiple production systems. </li></ul></ul><ul><ul><li>Application functionality across multiple systems diverges over time, making it difficult to get consistent views of vital business data. This causes duplication of master data describing customers, materials and products, and it increases the number of reports and the need for reconciliation across systems. </li></ul></ul><ul><ul><li>Globalization is a reality for many enterprises. This requires standardized business processes whenever possible. It's simpler to harmonize and standardize business processes on a smaller number of production systems, that is, using a centralized approach. (Gartner 2003) </li></ul></ul>
  15. 16. 21 st Century Org Trends <ul><li>Globalization </li></ul><ul><ul><li>Increasingly globalized sales, manufacturing, research, management </li></ul></ul><ul><ul><li>Movement from direct exports to having sales offices in different countries to having manufacturing to all functions spread across the globe </li></ul></ul><ul><ul><li>Increasingly globalized labor market </li></ul></ul><ul><ul><li>Due to: </li></ul></ul><ul><ul><ul><li>reduced cost and improved quality of international transportation and communication </li></ul></ul></ul><ul><ul><li>Search for unsaturated markets </li></ul></ul><ul><ul><ul><li>exploit regional cost and expertise differences </li></ul></ul></ul><ul><li>Diversity </li></ul><ul><ul><li>Workforce getting more heterogeneous sexually, racially, culturally, individually, etc. </li></ul></ul><ul><ul><li>Source of both innovation and conflict/communication problems </li></ul></ul><ul><ul><li>Need to cope with different styles of interaction, dress, presentation, physical appearance </li></ul></ul><ul><ul><li>Due to: </li></ul></ul><ul><ul><ul><li>changing demographics </li></ul></ul></ul><ul><ul><li>Gglobalization of the labor market </li></ul></ul>Global Trends in or AffectingOrganizational Structures in the 21st www.analytictech.com/mb021/ trends 2.
  16. 17. 21 st Century Org Trends <ul><li>Flexible </li></ul><ul><ul><li>Organizational systems and processes and people that can respond differently to different situations </li></ul></ul><ul><ul><li>Fewer detailed rules and procedures </li></ul></ul><ul><ul><li>Greater autonomy, encouragement for initiative </li></ul></ul><ul><ul><li>Customizable employment relationships: telecommuting, job sharing, mommy tracks, pay for skills </li></ul></ul><ul><ul><li>Lifetime employability, not lifetime employment </li></ul></ul><ul><ul><li>Due to: </li></ul></ul><ul><ul><ul><li>differentiated customer needs -- filling them exactly is source of competitive advantage </li></ul></ul></ul><ul><ul><ul><li>Increasing diversity in workplace </li></ul></ul></ul><ul><ul><ul><li>increased pace of change in technology and markets </li></ul></ul></ul>
  17. 18. Organization Style – Best Practices <ul><li>The ITIL Guidelines give very little specific guidance regarding IT organisation structures – on the basis that each organisation is unique and therefore any guidance would have to be very generic. Yet quote: Organizational structure plays a significant role in success or failure adopting ITIL </li></ul><ul><li>A study released in February 2006 by Evergreen Systems Inc. found that 72 percent of respondents to a survey claimed the biggest barrier to ITIL adoption in their business was organizational resistance. </li></ul><ul><li>Traditional IT organizational structure makes little distinction between process (task descriptions) and performance (task execution).  </li></ul><ul><ul><li>Traditional IT structure is silo based, with technical expertise concentrated into self-contained organizational units.  This silo structure is a legacy inherited from early IT operations, which collected technology and its technologists into manageable units.  </li></ul></ul><ul><ul><li>While some organizational change to support the reality of modern IT is inevitable, the real changes are not in where IT workers sit or to whom they report.  The real change is in how they dynamically organize and collaborate to accomplish an objective </li></ul></ul>
  18. 19. Laws for the New Rapidly Changing Economy Technology : <ul><ul><li>If you understand it, it's obsolete. </li></ul></ul><ul><ul><li>Strategy: If it's static, it's obsolete. </li></ul></ul><ul><ul><li>Training: If it's certified, it's obsolete. </li></ul></ul>
  19. 20. 10 Trends Emerging with Recovery <ul><li>Rapid movers start to predominate : some of today's XBox/Wii players are going to be CEO's of big companies within 15-20 years. The high-velocity economy is just starting to take off. Just wait until the Gen-Connect starts to run things. </li></ul><ul><li>Everything is gaining intelligence : chips and connectivity are immersing themselves into everyday, ordinary things, and you likely aren't even noticing. Hyper connectivity changes everything: bioconnectivity and device-intelligence are the things to watch. It's all about the cloud. </li></ul><ul><li>Volatility is the new normal : increasing connectivity increases the likelihood of cascading failures. Risk management is becoming more important, and more complex. Fewer organizations pay serious attention to the complexity of risk, leading to greater potential for short, sharp economic shocks. Smarter organizations seek smoothing of risk. </li></ul><ul><li>Boredom increasingly drives markets : people can't stop fidgeting with their cell phones long enough to pay attention to anything. Clarity of value is critical, creativity is crucial, engagement is the next brand foundation. </li></ul><ul><li>Transformational change is everywhere : there are lots of people dying to mess up the fundamentals in almost every industry, and they aren't your competitors. Industry blurring will continue unabated, as rebellion against established business models becomes the norm; think GoogleCar, not Toyota. Flexibility with change is critical. </li></ul>
  20. 21. 10 Trends Emerging with Recovery <ul><li>The bar of expectations continues to increase : you have to innovate to keep up with the expectations of your customer, partners and suppliers, or you don't survive. An increasing number of brands will expire and become something from &quot;the olden days,&quot; simply because their organizations lack the ability to innovate. </li></ul><ul><li>The &quot;created in China&quot; phase comes next : half the population is under the age of 25. They're wired, highly collaborative, and have tasted the early stages of economic success. Innovation is thriving - forget manufacturing, think design. </li></ul><ul><li>Big trends rule . Over 20 years, health care transitions from prevention to detection; ethanol moves from distillation to production; manufacturing goes from production to fabbing. There are big, sweeping industrial changes underway, and it has nothing to do with the current hype around &quot;social networking,&quot; et al. </li></ul><ul><li>Knowledge and discovery exponentiates : the new global-mind generates new knowledge at furious rates. We're going from 19 million known chemical substances today, to 80 million by 2025, and 5 billion by 2100. Any new substance can lead to the emergence of a billion dollar market. Discovery rules, time-to-market defines. </li></ul><ul><li>Experiential capital dominates over financial capital : over a 20 year span, it's the depth of experience that counts; the agility to respond to rapid change that will define the success or death of an organization. Money thrown at innovation doesn't work; the knowledge that comes from trying things out, and learning from the experience, leads to greater innovation success </li></ul>
  21. 22. <ul><li>SaaS - software as a service (SaaS) is growing at an annual rate exceeding 40 percent. In fact, it is expected to command a 23 percent share of the $120 billion U.S. software market by 2010, This cloud computing environment—which makes software ubiquitous across desktops, notebooks and mobile devices—will contribute to the expansion of SaaS into areas beyond ERP, CRM and HR management systems </li></ul><ul><li>Virtualization - The challenge for all companies using virtualization is to manage it effectively—and that’s not easy. “We are now seeing virtual server sprawl, and organizations must address it as a real problem </li></ul><ul><li>Enterprise mobility - “Ensuring that data is available when and where it’s needed has been an ongoing challenge, </li></ul><ul><li>Green data centers - “Virtualization eliminates energy costs, maintenance outlays, cooling expenses Department of Energy’s Data Center Efficiency program. Last summer, the agency introduced an application called DC Pro, which helps organizations quickly determine how energy is being used by their data centers and how they might be able to save energy and money. The tool is available as a free download. and data center costs by as much as 90 percent. </li></ul><ul><li>Social networking - Organizations are increasingly looking to next-generation social networking tools to conduct sophisticated business intelligence and analytics. </li></ul><ul><li>Web 2.0 - The common thread, according to Gartenberg, is that organizations are turning to an increasingly Web-centric computing model </li></ul>Technology Impacts Gartner Symposium Oct 2007
  22. 23. Technology Impacts Gartner Symposium Oct 2007 <ul><li>Security, Risk management - Surprisingly, a key challenge is one of perception, not technology. “Companies must get over the idea that security and compliance systems are simply insurance against problems, and that they don’t improve the business in any measurable way, </li></ul><ul><li>eDiscovery organizations are learning that electronic discovery (e-discovery) is a process, not a technology. “It [e-discovery] increasingly includes a whole range of tools and technologies that create a complete solution, </li></ul><ul><li>PPM – Project Management and Portfolio Management) As organizations embrace PPM, Synergy’s Oltmann says, they are becoming far better equipped to react to rapidly changing business and industry conditions. “At this point, it is important for IT to develop PM and PPM expertise,” he says. “These started as business initiatives, but they have become a crucial part of IT.” </li></ul><ul><li>Web and Video Collaboration 63 percent of companies say they will be using videoconferencing and so-called telepresence systems (essentially, a form of videoconferencing with high-quality images and audio) by the end of 2010 - Cisco Telepresence Other vendors are marrying conferencing and collaboration with Web 2.0. KZO offers a system that creates up to a six-way conference without charge and requires only a Web browser. It also allows keyword tagging and provides for live comments from people watching the video. </li></ul><ul><li>Meanwhile, the mobile-video market is also gaining momentum. In-Stat, a market research firm in Scottsdale, Ariz., predicts that 160 million devices for viewing mobile video (not including mobile phones) will be sold over the next five years. </li></ul>
  23. 24. <ul><li>Working with people is difficult but not impossible - Peter Ducker. </li></ul><ul><li>Work expands to fill the time available for its completion - Northcote Parkinson (Parkinson's Law). </li></ul>
  24. 25. Future WorkForce Dynamics Take a look at this kid. He's your next employee. How are you going to recruit, retain, manage, interest and amuse this fellow? What's your workforce going to look like in 2012, 2020, or beyond?
  25. 26. Future WorkForce Dynamics <ul><li>there is a huge amount of expertise walking out of the economy . In 2010, 3 people will leave the economy for every person that enters it; by 2012, 4. By 2016, 6 people will leave for every new worker that joins. Those are staggering realities. </li></ul><ul><li>the current generation entering the workforce is completely rejecting the concept of a traditional career . More than 50% of young people in a US survey indicated they believe self-employment to be more secure than a full time job. They don't want to work for big organizations. They'll be nomadic, contingent workers, entrepreneurial and global. </li></ul><ul><li>skills are fragmenting and specializing at a furious pace . Knowledge half-lives in most industries are compressing to a matter of just a few years. Knowledge extinction is real, and massive skills fragmentation is occurring at an extreme velocity. The result is that most organizations will find future failure will come from an inability to get specialized skills. A strategy that is focused on global access to extremely specialized skills will be a transformative factor for winning. </li></ul>
  26. 27. Economy <ul><li>Gartner: 66% IT have no resource plan </li></ul><ul><li>64% of 354 companies responding – IT hiring on hold next 12 months. </li></ul><ul><li>Availability of skilled talent, many available, are they the fit needed. </li></ul><ul><li>In contrast, a total of 35.9 percent of respondents projected an increase in IT head count. Although some geographic markets, such as the Northeast, were seriously affected by hiring freezes and layoffs, survey respondents continue to have difficulty in finding skilled enterprise architects, database administrators, ERP programmers/analysts, project managers, Internet/Web architects and Web application programmers. </li></ul><ul><li>Lower turnover rates </li></ul>
  27. 28. <ul><li>Bosses tend to get the workers they deserve - Martin Wiener. </li></ul>
  28. 29. Emergence of the CIO Role <ul><li>The CIO position has emerged in the early 80s (Synnott and Gruber 1981) in response to rapidly changing technology, frequent changes in consumer preferences that require market orientation and data mining tools, increased business competition that requires new delivery channels and services, enhanced user sophistication who demand greater functionality, and the emergence of the ‘information economy’ (Benjamin et al. 1985; Fleming, 2002). </li></ul><ul><li>successful CIOs actually blend three pairs of roles. At any given time, a CIO is: </li></ul><ul><ul><li>An Insightful Visionary and an Able Pragmatist </li></ul></ul><ul><ul><li>A Savvy Value Creator and a Relentless Cost Cutter </li></ul></ul><ul><ul><li>A Collaborative Business Leader and an Inspiring IT Manager </li></ul></ul><ul><li>CIOs will increasingly come from backgrounds other than IT; Forrester’s data shows that 35 percent of North American CIOs come from non-IT backgrounds </li></ul>CIO Data Processing Manager
  29. 30. OC CIO Survey results <ul><li>6 respondents, representing 8 companies </li></ul><ul><li>2 Public / 6 privately held </li></ul><ul><li>Industries represented: </li></ul><ul><li>Market Cap range $50M - $4.6B </li></ul>
  30. 31. OC CIO Survey results <ul><li># employees </li></ul><ul><ul><li>locations </li></ul></ul><ul><li>IT Reports to: </li></ul>
  31. 32. OC CIO Survey – IT Employees <ul><li>% IT Employees compared to total Employees </li></ul><ul><li>% Regular IT Employees compared to IT Contract/temp/Offshore </li></ul>
  32. 33. OC CIO Survey – IT Services/ Budget Budget as a % of Annual revenue <ul><li>Services Outsourced : </li></ul><ul><li>SW Dev (3) </li></ul><ul><li>WAN </li></ul><ul><li>Web store front </li></ul><ul><li>Infrastructure </li></ul><ul><li>Data center Co-lo </li></ul>
  33. 34. Presentation Goals/Questions to answer/Take aways <ul><li>What is/will be affecting the way IT is organized? </li></ul><ul><li>Does the way IT is organized have an impact on how the value of IT is perceived? </li></ul><ul><li>How will you handle it and how will it affect the role of CIO? </li></ul>
  34. 35. References <ul><li>ITIL Organization Structure:http://www.itilpeople.com/articles/ITIL%20Organisation%20Structure.htm </li></ul><ul><li>Gartner – Centralized vs Decentralized (2003) </li></ul><ul><li>PMI/PMBOK </li></ul><ul><li>William M. Ulrich, President and Founder of Tactical Strategy Group, Inc. w ww.systemtransformation.com . </li></ul>