1) The document describes a study of an IT organization that underwent a major redesign by a new CIO to increase codification of activities and control costs. 2) Interviews and observations were conducted with stakeholders to understand their perspectives on the changes, implementation process, and consequences. 3) The case analysis highlights challenges designers of support organizations face when increasing codification, such as paying attention to local context, constant communication, avoiding an overly strict alignment that ignores issues, and considering how increased codification could enable outsourcing.

1. OrganizationScience
Vol. 17, No. 2, March–April 2006, pp. 190–201
issn 1047-7039 eissn 1526-5455 06 1702 0190
informs®
doi 10.1287/orsc.1050.0171
© 2006 INFORMS
Multiple Faces of Codification: Organizational
Redesign in an IT Organization
Emmanuelle Vaast
School of Business, Public Administration, and Information Sciences, Long Island University,
1 University Plaza—H700, Brooklyn, New York 11201, emmanuelle.vaast@liu.edu
Natalia Levina
Information Systems Group/IOMS, Stern School of Business, New York University,
44 West Fourth Street, Suite 8-78 (KMC), New York, New York 10012, nlevina@stern.nyu.edu
This paper details a longitudinal interpretative field study of an information technology (IT) organization in which a
new chief information officer (CIO) implemented a major organizational redesign. The redesign increased the degree
of codification in activities of the IT organization so as to control, coordinate, and deliver services more cost effectively
to its business clients. We examine different stakeholders’ views of the change, the implementation processes, and the
consequences of the redesign.
The case analysis emphasizes specific challenges that designers of support organizations face when increasing the degree
of codification. Key implications include the need for these designers to (1) pay as much, if not more, attention to the
local organizational context as they do to the external environmental conditions; (2) communicate and negotiate constantly
with various stakeholders concerning the appropriate degree of codification and control; (3) be wary of how a strict
alignment of all design elements can blind the designer to important, unrecognized issues; and (4) consider that increased
codification may help support organizations compete more efficiently with external vendors, but may also ease the process
of outsourcing.
Key words: organizational change; redesign; qualitative methods; ethnography; information technology; codification;
outsourcing
In their preface to the Handbook of Organizational
Design Nystrom and Starbuck emphasized that organi-
zation design concerned explicit and intended attempts
to change organizations. They argued that understand-
ing organizations comes from attempts to change them
(1981, p. xii). Although researchers rarely change orga-
nizations directly, they can gain valuable insights from
“natural experiments,” such as when they observe orga-
nizations that have implemented alternative designs. This
paper describes such a natural experiment—an organiza-
tional redesign effort targeted at improving project effi-
ciency and control in the IT organization of a European
insurance company.
In the last decade, corporate IT organizations have
been reorganizing to meet the challenges of increasing
performance pressures and changing technology. Cost-
saving pressures have been, and remain, a constant
theme (Cross et al. 1997). These pressures are particu-
larly hard to address because of IT workers’ skill short-
ages, high turnover, and rising salaries (Slaughter and
Ang 1996). At the same time, IT organizations are asked
to develop novel IT applications that offer unique com-
petitive advantages to their firms (Sambamurthy et al.
2003). Developing such applications requires long-term
investments in cross-functional teams with shared lan-
guage and norms for interaction, which are difficult to
achieve under cost-cutting pressures (Kraut and Streeter
1995, Levina 2005).
Case studies of organizational design efforts in IT
organizations most frequently focused on post hoc analy-
ses of successful redesign efforts (Ross et al. 1996, Clark
et al. 1997, Cross et al. 1997, Brown 1999, El Sawy et al.
1999). Nystrom and Starbuck (1981), however, argued
that much can be learned about organizational design
from observing organizational transformations unfold
before outcomes are known (Pettigrew 1990, March
et al. 1991). We used this approach, as we collected
data about an IT redesign effort before anybody knew
its outcomes.
Methods
Our research continues the tradition of interpretive lon-
gitudinal studies of organizational change (Barley 1986,
Prasad 1993, Orlikowski 1996, Boudreau and Robey
2005). An interpretive approach assumes that agents and
field researchers subjectively understand and construct
social reality (Burrell and Morgan 1979). Specifically,
we followed Klein and Myers’s (1999) guidelines for
interpretive field work.
Field Setting
The field study was conducted at the IT department of
ServCo, a pseudonym for a European insurance com-
190

2. Vaast and Levina: Organizational Redesign in an IT Organization
Organization Science 17(2), pp. 190–201, © 2006 INFORMS 191
pany. In 1999, a new chief information officer (CIO),
Peter, undertook a major redesign of ServCo’s corpo-
rate IT department (henceforth, SIT). Our study exam-
ines implementation of Peter’s redesign and describes
what happened one year before, and two years after, his
arrival.
Data Collection
One author (“the field researcher”) observed departmen-
tal practices from March to September 2000. She inter-
viewed staff about the department’s recent history and
maintained contact with key staff members for a year
after she left the department. Participant observations
(three days each week, eight-hour days on average)
started 15 months after Peter’s hiring, but before the
results of his redesign were clear. The field researcher
studied SIT and how Peter’s new project management
approach affected the transformation. She investigated
what Peter did, what transpired before and after his
arrival, and how diverse stakeholders perceived the
results. Peter granted the field researcher widespread
access because he anticipated an independent and “sci-
entific” validation of his redesign.
Data collection relied on ethnographic methods to
understand what SIT’s staff did and how they made
sense of their work (Van Maanen 1988, Patton 1990).
The field researcher followed SIT’s members on their
daily tasks, observing individual activities and informal
interactions with each other, Peter, and internal clients.
Although it is unrealistic to assume that the researcher’s
presence had no impact, she soon became an accepted
and inconspicuous part of the department’s routine. Peo-
ple became comfortable with her and expressed opinions
about their work, colleagues, clients, and manager.
Beyond casual discussions, the researcher conducted
formal semistructured one-on-one interviews (recorded
and transcribed, lasting from 45 minutes to 2 hours)
with SIT’s managers (5 interviews) as well as with SIT’s
permanent employees (20 interviews). The researcher
conducted these interviews in the middle of the par-
ticipant observation period. Respondents described how
the reorganization affected their positions and relation-
ships with coworkers and business clients. Peter did not
authorize interviews with temporary SIT’s workers or
clients because he believed that the researcher should
not be concerned with their views. The field researcher
nonetheless availed herself of these interviews by the
virtue of being in the organization on a daily basis. She
informally interviewed 10 temporary workers and five
managers of ServCo’s business units (clients of SIT).
She also met with ServCo’s CEO, Peter’s direct superior,
and several of the CEO’s close collaborators.
The field researcher also informally interviewed sev-
eral former SIT’s employees who left during or after
the redesign. They provided additional data about the
department’s history. She also analyzed archival doc-
uments, official policy announcements, annual reports,
and several public statements. After she left, key infor-
mants updated the field researcher on new developments.
Data Analysis
Data analysis occurred in two stages. First, the field
researcher categorized her observations, field notes, and
interview transcripts. She wrote monographs summariz-
ing her observations and analyses, refined her mono-
graphs as she received feedback, and as SIT changed
(Pettigrew 1990). She applied various qualitative anal-
ysis techniques (Miles and Huberman 1984) and prin-
ciples of grounded theory development (Strauss and
Corbin 1998) to address and interpret linked stages
of data reduction (see Vaast 2003 for details of the
analysis).
The second stage of analysis involved collaborative
work between the coauthors. The coauthor challenged
the field researcher’s accounts and interpretations of
events by asking questions and suggesting alternative
explanations, which, in turn, generated further questions.
This collaboration helped address the dilemma of the
need to be both involved and detached from the study
field (Patton 1990).
We use vignettes to describe the changes envisioned
and enacted at SIT (Carlile 2002). We leave conceptual
analyses of the changes for the discussion section.
Redesigning the IT Department:
An Interpretive Case Study
Before the Redesign
ServCo is a traditional, medium-sized, European mutual
insurance company with 6,000 employees, 500 local
branches, and annual revenue over E2 billion. ServCo
holds 50% market share of property and life insurance
for small businesses in its home country, and its market
strategy traditionally relies on long-term relationships
with loyal customers. ServCo’s employees perceive this
solid customer base as a source of security that allows
the company to adjust slowly and deliberately to indus-
try changes. ServCo’s senior managers stated that with
any change it was important to maintain their underlying
principles and reputation of providing loyal customers
with superior service and treating employees humanely.
Layoffs were a taboo at ServCo. ServCo’s organizational
structure is depicted in Figure 1.
Located at ServCo’s headquarters, SIT employed
about 400 IT professionals, two-thirds of whom were
permanent workers, while the rest were temporary (con-
tract) workers. SIT’s mission was to maintain and update
existing (mostly mainframe) claim processing, sales sup-
port, HR, and various other support systems (imple-
mented in the late 1970s and early 1980s); to equip local

3. Vaast and Levina: Organizational Redesign in an IT Organization
192 Organization Science 17(2), pp. 190–201, © 2006 INFORMS
Figure 1 ServCo’s Organization Chart
General
management
Support
departments
Operational
departments
IT department
Life insurance
department
Small
business
department
General
products
department
Communication
department
Human
resources
department
Legal
department
National network of local branches
branches with hardware and software; and to introduce
new systems gradually for ServCo business units (or
“clients”). Many projects dealt with refining query capa-
bilities and adding users to existing applications. Bigger
projects consisted of upgrading existing applications or
migrating data into newer technologies.
Albert, the former CIO, was an old-timer at ServCo.
Although he had no formal IT training, he had been at
ServCo for 25 years and had gradually climbed the man-
agerial ladder. He had been the CIO for about 10 years
and enjoyed the full confidence of ServCo’s CEO.
According to SIT’s old-timers, Albert believed that his
department’s purpose was to provide high-quality cus-
tomized services and user-friendly systems to its clients.
Under Albert’s leadership, SIT’s teams consulted clients
frequently, involved clients in decisions, and worked
with them continuously throughout projects. Back-and-
forth iterations often delayed a project’s completion, but
allowed SIT to “keep its clients happy.”
The department’s internal organization reflected col-
laboration and long-term commitment to clients. Perma-
nent employees worked alongside temporary workers,
who typically had long-term contracts. Many ServCo
employees from other departments joined SIT after com-
pleting IT training. Position assignments and promotions
were based on clients’ satisfaction and only partially
related to formal technical backgrounds. The following
vignette illustrates the atmosphere in SIT under Albert’s
tenure.
Vignette 1 Daniel’s Story During Albert’s Management
Daniel, a project manager in his early forties with a
bachelor’s degree in computer science, had worked at
SIT for 18 years. Over the last few years, Daniel had
specialized in IT projects for the HR department. Five
of SIT’s people (two temporary and three permanent
workers) permanently worked with him on these
projects in a dedicated office space. Moreover, Daniel
could easily get advice on issues from any other SIT
employee. To start a new project, HR department
members would typically phone Daniel and explain
their project. Once the project started, clients would
visit their SIT’s group at least twice a week to review
prototypes and provide feedback. Phone calls and
e-mails were used to schedule meetings or adjust
requirements.
Daniel recalled: “Before the reorganization, I was
a project manager, and everyone else almost was a
project manager at times. I took care of the realization
of projects from beginning to end. We were the
HR freaks [laughs]. We worked together all the time,
and we had done so for years. That helped because we

4. Vaast and Levina: Organizational Redesign in an IT Organization
Organization Science 17(2), pp. 190–201, © 2006 INFORMS 193
Figure 2 SIT’s Organization Chart: Before Redesign
Albert’s
managerial
team
Division for
operational
systems
Division for
support
systems
Service for
general
products’
systems
Service for
branches
Service for
HR systems
Service for
legal systems
Service for
communications
systems
Service for
small
business
systems
Service for
life insurance
systems
knew what we knew and we did it well. Depending
on the project, we had other colleagues with us. It was
very flexible. Not like now [laughs, referring to the
new organization of the department].”
Services and self-organized teams followed ServCo’s
departmental structure supporting key applications for
each client (as illustrated in Figure 2). Teams often
tapped the other team’s expertise by simply asking
for help.
In each project, one or two IT professionals communi-
cated with clients. Typically, such people had previously
worked in the clients’ department, so they understood
the clients’ practices and interests. Véronique’s situation
was typical.
Vignette 2 Véronique Helps the “Computer Geeks”
Understand Clients
Véronique had worked in ServCo’s legal department
for 15 years before making a career change after
participating in IT’s professional training, sponsored by
an internal mobility program. She had been an analyst
at SIT for five years, providing IT service to the legal
department. Véronique often visited her former
colleagues and discussed IT issues, especially when
a new project was under way.
Recently, Véronique was involved in implementing
a new database for the legal department. Initially, IT
people suggested someone from SIT should act as
administrator for the legal database. The clients,
however, rejected the proposal. Véronique understood
why clients wanted to control management of the
database and why SIT was concerned with the lack of
computer skills among legal professionals. After
numerous meetings, everyone agreed to appoint an
administrator who would work for the legal department
after being trained by SIT. Véronique commented on
her role: “Apparently, I was a success: I could make
the ‘book geeks’ talk to the ‘computer geeks,’ and
vice-versa!”
Liaisons like Véronique also helped explain to clients
the trade-offs associated with choosing particular tech-
nological platforms for a project. Clients and SIT’s
workers jointly negotiated and agreed on technological
investments.
SIT’s workers and managers appreciated both Albert’s
management style and his trust in them. Most clients,
especially those with a liaison like Véronique, valued
being involved throughout projects. Some clients had
liaisons with no prior experience in their field, and these
projects took longer to decide on the scope and nature
of work, and appropriate technological choices.
Peter’s Arrival and Redesign of SIT
In 1998, Albert resigned because of poor health, and a
committee was appointed to fill his position. The search
committee consisted of managers from client depart-
ments and the HR department; it also consulted with
SIT’s middle managers. ServCo’s CEO made the final
hiring decision based on the committee’s recommenda-
tion.
No candidate satisfied the search committee: Current
middle managers from SIT had insufficient manage-
rial experience; senior managers from other departments
were not technically trained and might treat clients
unequally; and most external candidates did not under-
stand ServCo’s culture. Peter was an external candidate.
He had a technical education and was the former CEO

5. Vaast and Levina: Organizational Redesign in an IT Organization
194 Organization Science 17(2), pp. 190–201, © 2006 INFORMS
of a small electronics company that supplied hardware to
SIT. Because Peter had had previous dealings with SIT,
some search committee members thought he understood
ServCo. Moreover, Peter had just started a prestigious
part-time graduate degree program in business, which
indicated to some committee members that he had man-
agerial potential. The search committee’s recommended
that ServCo’s CEO hire Peter, which he did, although
no one was fully satisfied with this choice.
On taking over his new position, Peter assessed SIT
by relying heavily on his experiences as its former sup-
plier. He had observed redundant orders and last-minute
changes in hardware choices that convinced him that
SIT could, and should, be run more efficiently, so Peter
undertook a drastic reorganization. He did not consult
clients or most tenured managers about his decision,
although he did explain it to the CEO, promising him
that the new, redesigned organization would deliver the
same IT services at a lower cost and without person-
nel layoffs. Attracted by the promised savings without
layoffs, the CEO accepted Peter’s plan.
Peter’s organizational redesign had three aspects.
First, Peter believed that the department should have a
clear structure, with definite roles for everyone. Instead
of self-organizing teams, Peter documented task respon-
sibilities so that no time or resources would be lost
searching for “who knows what and where.” Second,
Peter streamlined relationships with clients because he
believed the high degree of customization common
under Albert’s tenure was a poor use of scarce IT
resources. Peter thought that most ServCo projects were
mid-sized, had substantially routine dimensions, relied
on similar technologies, and satisfied similar needs. In
his view, a standardized approach would reduce costs
while providing timely and relatively simple services.
Third, Peter strongly believed that SIT should spearhead
ServCo’s technological infrastructure decisions because
SIT had superior technical expertise. Given clients’ lim-
ited expertise, Peter maintained that SIT should not
discuss new technologies with clients, but rather, SIT
should lead them toward technologies that SIT consid-
ered best. The new CIO also believed that he had CEO’s
full support:
There is a strong will from the CEO for the IT depart-
ment to play the part of a “conductor” [coordinating
requests of diverse clients] with regard to their IT invest-
ments. You can feel a strong appetite at ServCo for so-
called “new” technologies. But, this appetite does not
always go with a deep understanding of what these tech-
nologies are. When it comes to new technologies, the
main question has to do with the arbitrage between the
swank and the cost.
Peter thought SIT’s clients wanted technologies that
“looked good and sounded good,” even if they were
risky, expensive, and would not meet clients’ expec-
tations. He was convinced that the CEO saw SIT as
ServCo’s technological authority:
Very soon [after I was appointed], he [the CEO] let the
management of the IT department decide on the tech-
nologies and platforms, because [the CEO] or the other
departments did not have the required competencies in
these matters.
Although Peter believed that he had the support of
ServCo’s CEO, the field researcher observed that the
CEO and his associates presented their support more
tentatively and cautiously than Peter acknowledged.
Internal Reorganization. Peter radically restructured
SIT: formal groups were reorganized to work on spe-
cific technologies (e.g., new media group, Unix server
group), as illustrated in Figure 3. Daniel (cf. Vignette 1),
who previously had worked on several technological
platforms for HR, now had no direct contact with HR.
Instead, he managed 25 Unix specialists and was exclu-
sively in charge of ServCo’s Unix projects. Figure 3
shows the functional specializations of the new SIT’s
groupings.
Within each group, everyone now documented their
work exhaustively. Peter explained the documentation
process:
My first step was to give everyone clear job descriptions
and to provide them with a well-documented information
base of the technologies that they had to know inside out.
I had been flabbergasted to discover that there was no
such thing as a clearly determined man/task relation, and
you would never have been able to find the manual for
any technology—whether old or new.
Documentation consisted mostly of vendors’ applica-
tion manuals, descriptions of system architectures, and
functionalities developed by department members: orga-
nizational charts, procedural templates, and individual
job descriptions. Every department member received
some documents, such as organizational charts. Other
documents were available to select department mem-
bers, depending on their job. For instance, only those
involved with a particular project had access to the doc-
uments for this project. Documentation was originally
paper based, but gradually was stored on the depart-
ment’s intranet. Interactions were less frequently face to
face and more often based on written communications.
In ongoing communications to staff, Peter relied primar-
ily on e-mail memos.
In each group, tasks and jobs were precisely described
and differentiated along a “design” versus “implemen-
tation” dimension. The system analysts’ job description
stated: “Analysts produce outline designs for others to
program and deliver.” Peter proclaimed that SIT’s core
competencies should be analysis and design, not pro-
gramming and production. He believed that permanent
employees should provide analysis and design, and tem-
porary employees should implement them.

6. Vaast and Levina: Organizational Redesign in an IT Organization
Organization Science 17(2), pp. 190–201, © 2006 INFORMS 195
Figure 3 SIT’s Organization Chart: After Redesign
Peter’s
managerial
team
Division for
telecommunications
systems
Division for
functional
architecture
systems
Service for
e-mail
deployment
Service for
Unix servers
Service for
client /server
applications
Network
applications
service
New media
service
Division for
transaction
systems (TS)
TS
support service
TS
maintenance
development
service
Staff changes accompanied the redesign. Between
1998 and 2000, contracts of temporary workers, who
had previously worked in SIT for up to two years, were
not renewed, although some with formal IT degrees and
design experience were hired permanently as designers.
New temporary workers with programming backgrounds
received short, nonrenewable contracts. Turnover pre-
vailed among permanent employees, and although the
reorganization did not involve any layoffs, many old-
time permanent workers resigned or took early retire-
ment, as illustrated in Vignette 3. All in all, about
half of the department membership changed during two
years.
Vignette 3 Philippe’s Story: Permanent Employee
Who Retired After the Reorganization
Philippe, in his late 50s, had worked for 25 years in
SIT. He had no formal training in IT, but had acquired
IT design and analysis skills. He had gradually become
critical in supporting and developing ServCo’s
accounting information system. Moreover, he had
worked for many different projects and with many
different people, which made him a “living” history of
SIT. When the department was reorganized, Philippe
was not offered a management position because he did
not have any formal IT training. Instead, he became the
subordinate analyst of a newly hired manager for the
“Transaction Systems Support Services” group.
Philippe decided to retire.
Those who stayed felt a loss when people like
Philippe left. Sandra, an old-timer permanent
employee, noted:
“Philippe [leaving]—it is such a pity. With the
old-timers who departed, it is a whole part of specific
knowledge of [SIT] that left with them. Peter does not
see that. It has to be his way. It is everyone
[working] in their own place, but it does not really
work that way” [emphasis added].
Early in the reorganization, some veteran workers
resisted Peter’s changes and refused to use prescribed
documents. Some created their own documents, which
they stored on a secret shared computer drive. They
soon realized that this double documentation created
redundancies and work overloads, and they gradually
abandoned these guerilla tactics. As many knowledge-
able old-timers left, those remaining realized that they
needed to rely on the extensive documentation to imple-
ment projects. During Peter’s tenure virtually no one
from other departments applied to work at SIT, and
several SIT employees applied for transfers out of the
department.
Reorganization of the SIT-Client Relationships. Peter
wanted to reshape SIT’s relationships with clients by
using rules and forms to identify and assign projects. He
proposed a new Web-based information system that for-
malized relationships and tracked workflow, task assign-
ments, and mutual responsibilities. Peter directed SIT to
develop a “Clients’ Project Management” (CPM) appli-
cation. SIT did not consult clients about this applica-
tion, nor were clients invited to discuss its purpose,
user-friendliness, or functionalities. The CPM applica-
tion included forms to be completed by clients, SIT

7. Vaast and Levina: Organizational Redesign in an IT Organization
196 Organization Science 17(2), pp. 190–201, © 2006 INFORMS
managers, design team, and implementation team during
projects. A project request form included the rationale
for a new system or upgrade, expected functional capa-
bilities, capacity, and desired completion date.
The new CPM application came online in mid-1999,
and SIT policy required that clients and project teams
use it for all new projects, regardless of size. Clients
submitted request forms to SIT, which used the request
forms to develop specifications and prototypes. Project
managers sent these “deliverables” to clients, who used
other CPM forms to note their reactions. CPM detailed
all formal interactions about each project, but did not
allow clients to discuss their issues, concerns, or tech-
nological preferences. Peter thought that these decisions
were SIT’s responsibility and did not require discussions
with clients.
SIT’s permanent employees were assigned to design
teams based on their formal education and technical
skills, not on their prior experiences at ServCo. An old-
timer permanent worker commented:
Today, we need to write down all the specifications,
because an altogether different team is going to be in
charge of implementation. It is not easy to relate the work
of the two teams. We need files [forms from the CPM
applications] that document the knowledge that we [the
design team] developed.
Vignette 4 illustrates how the CPM application strictly
limited project accountability by clients, SIT project
managers, design teams, and implementation teams.
Vignette 4 Three IT Designers Discuss Accountability
During their coffee break, two permanent employees,
Chris and Jasmine, explain to a newly hired permanent
employee, Maureen, how SIT works. Maureen was
hired into the New Media Group two weeks ago, where
she works in close collaboration with Jasmine.
Maureen: “How do we know if we meet HR’s
specifications?
Jasmine: “You do not have to worry too much about
this. We send specifications to them [the
implementation team composed of temp workers] and
that’s it. So far, I don’t think we’ve had any problem
with that. It must work.”
In client relationships, special liaisons no longer
existed, as illustrated in Vignette 5.
Vignette 5 Veronique’s New Role: Liaisons Removed
Véronique (cf. Vignette 2) is now working in the
Unix department under Daniel’s supervision. She
describes her new situation: “ now, [Peter] decided
to implement the CPM application that clearly
facilitates management of new projects for our
department. For most projects now, I am not dealing
with the legal department any more, they do not need
me any more.”
Project managers, assigned to their roles based on
technical qualifications and formal project management
training, now assumed responsibility for relationships
with clients. They verified that clients and project teams
fulfilled obligations recorded in the CPM. Only team
members involved in the project, not clients, attended
project team meetings.
Change Implementation. Peter relied on three addi-
tional practices to accomplish the reorganization. First,
he organized training sessions for permanent employ-
ees on “proven project management techniques,” such
as defining project stages and efficiency measures. Sec-
ond, he reorganized the work space. Previously, rooms
were assigned for specific projects; now, each special-
ist service, involving 20 to 30 people, occupied several
rooms. Permanent employees designing projects were
located on the first floor, while the temps implement-
ing these designs were located on the second floor.
Third, Peter communicated with his department through
monthly meetings with managers and permanent work-
ers, minutes of which were e-mailed to SIT’s members.
Table 1 shows SIT structures and activities before and
after redesign.
Consequences of Redesign
SIT’s transformation resulted in several expected and
some unanticipated consequences. As expected, the
redesign saved resources. Projects were delivered, on
average, about 1.5 person days faster than previously,
which reduced costs by 20%. Eventually, most perma-
nent employees accepted Peter’s new approach to IT
management. An old-timer commented:
Before [under Albert’s tenure], we worked as a big team
and our work was somewhat anarchic, but we did a
good job. I must admit that [SIT] deserved reorgani-
zation because this big messy team needed a bit of
formalization.
Clients without a “special IT liaison” during Albert’s
tenure expressed satisfaction with the new SIT, espe-
cially the time savings. SIT permanent workers were
proud that they delivered systems closely matching CPM
specifications and did so on time.
Peter and his supporters, however, did not know
that some clients had grown increasingly dissatisfied
with the CPM system and its deliverables. Many
delivered applications did not match clients’ wants
or expectations. Clients struggled to describe system
requirements using CPM’s unfamiliar terms and were
frustrated that they could not discuss technological plat-
forms (clients increasingly desired newer technological
platforms). Peter permitted newer platforms only when
he deemed them necessary and cost efficient. Mostly,

8. Vaast and Levina: Organizational Redesign in an IT Organization
Organization Science 17(2), pp. 190–201, © 2006 INFORMS 197
Table 1 SIT’s Organization Before and After Redesign
Before redesign After redesign
Strategy Delivering customized services to clients. Increasing efficiency and control over projects.
Structure Different divisions and services based on type of
systems used by various clients: claim processing,
legal, HR, etc.
Different divisions and services based on type of
technology involved in different systems: Unix, TPS,
new media service.
Human resources —400 employees, 2/3 permanent, 1/3 temporary. —400 employees, 2/3 permanent, 1/3 temporary.
—Temporary workers’ contract often repeated: typical
2–3 year tenure at SIT.
—Temporary workers’ contracts shorter and not
renewed: typical 3–6 month tenure at SIT.
Project organization —Defined around clients. —Defined around project technologies.
—Within projects, authority given by previous
experiences in SIT and with clients.
—No distinction among stages of projects.
—Authority given by formal IT training.
—Clear distinction among design and implementation
tasks.
Project processes Recursive: Projects realized in an iterative and
recursive way, all parties contribute to and
constantly challenge the design of information
system.
Linear: Projects accomplished through three
consecutive phases (Requirements Solicitation,
Design, and Implementation) with little overlap
among phases and people involved.
Project control Mutual control, with both clients and SIT people
sharing common goals, and deciding on
appropriate technology platforms.
SIT controls implementation and chooses
technological platforms. Clients accept or reject
systems and decide on sourcing options.
Liaison roles Business analysts and project managers with work
experience in both SIT and clients’ business units
coordinate work between parties.
SIT’s project managers oversee project
implementation.
Communication
with clients
—Ad hoc and continuous: Meetings, phone calls,
e-mail.
—Fax, slides, and e-mail present and discuss
ongoing projects with clients.
—Standardized at project’s milestones, mostly
electronically mediated: Using intranet application
(CPM) and e-mail to exchange specifications and
deliverables among clients, and workers.
he continued using older mainframe platforms for
economical reasons. By early 2000, however, increasing
numbers of clients wanted Web platforms, as illustrated
in Vignette 6.
Vignette 6 HR Managers Don’t Get What They Want
In early 2000, the HR general manager heard of new
Web-based groupware applications and wanted HR to
get such a system. His collaborator filled out a CPM
request form that expressed the main expected features
of groupware applications (file sharing and
collaborative discussions). The HR manager anticipated
a flexible and user-friendly Web-based application.
Based on the requirements filled out in the CPM
forms, SIT provided the HR department with access to
shared folders on a (mainframe) server where they
could share documents. Members of the HR
department viewed these folders as not user-friendly
and lacking in the functionality they had expected.
Several HR managers expressed their frustration to
the field researcher over SIT’s unwillingness to listen
to their real needs. HR managers argued that the
groupware project was characteristic of the inadequate
and “arrogant” way SIT worked on most projects. HR
managers did not express this dissatisfaction directly to
SIT’s managers; instead, they chose to talk to
ServCo’s CEO.
Temporary workers implementing designs developed
by permanent employees were the only SIT peo-
ple directly confronting clients’ growing dissatisfaction.
Often, they provided on-the-spot fixes for clients’ most
pressing needs, but fixes were limited, as temporary
workers lacked authorization to deviate from design
specifications. Due to their subordinate role, temporary
workers did not relay clients’ concerns to SIT’s manage-
ment. One of them explained:
I do work here, for the moment. Dealing with imple-
mentation, I apply projects’ specifications. Sometimes
clients ask for different things, so I do this, or this, or
that. It’s no big deal; it’s part of my job. You always
have to “re-specify” things to some extent when you
implement I’m not sure they understand this here
[at SIT]. But this is not really my business, anyway.
In early 2000, the HR department complained to
the CEO about the groupware project. They convinced
the CEO that SIT had mishandled the task, and ServCo’s
CEO authorized HR to award a contract to an exter-
nal vendor. Other clients soon began outsourcing. As
customers of external service providers with control
over payments, ServCo business units had more influ-
ence on projects than they did internally. Outsourced
projects included joint development sessions between
clients and the vendor’s system designers to discuss busi-
ness needs and system features. Most vendors assigned

9. Vaast and Levina: Organizational Redesign in an IT Organization
198 Organization Science 17(2), pp. 190–201, © 2006 INFORMS
a key project manager to liaise with clients, visiting
weekly to discuss the project and to receive feedback.
Because of extensive outsourcing, SIT’s activity level
dropped and the CEO reallocated IT resources according
to departmental needs. The CEO asked Peter to resign.
Peter went on to complete his master’s degree and
become CEO of a small IT company that specialized in
developing software applications for insurance compa-
nies. At SIT, one of the CEO’s close collaborators, with
a background similar to Albert’s, replaced Peter. SIT
shrank: All temporary workers left and half the perma-
nent workers were reallocated to other departments. Sev-
eral reassigned workers began acting as liaisons between
ServCo and external IT vendors. SIT’s redefined mis-
sion was to maintain and support preexisting systems.
All new developments or big enhancement projects were
outsourced. The CPM application tool remained to sup-
port routine maintenance tasks.
Discussion: When Codification Turns Sour
Nystrom and Starbuck (1981) noted that organizational
redesign strives to change and improve the existing
order. The existing order of SIT indisputably changed,
but the organization almost disappeared, and its key
designer resigned. We argue that the transformation had
multiple aspects (see Table 1) that involved exploit-
ing individuals’ technical competencies while increasing
codification and SIT’s control over technical decisions
and project execution. These changes built clear bound-
aries between SIT and clients, and among IT profes-
sionals. We focus on, first, the environment-design fit,
second, the transformation process, and third, reasons
the redesign failed. We discuss how diverse stakeholders
perceived the codification and its consequences.
Environment-Design Fit: Negotiation of the Relevant
Aspects of the Environment
For over 40 years, organizational design researchers have
grappled with what is the optimal degree of formalism
(or codification). Mechanistic organizing, with high lev-
els of codification, seem to work well when routine tasks
must be performed efficiently in stable environments.
Less formal (organic) approaches seem better suited
for turbulent environments (Burns and Stalker 1961,
Lawrence and Lorsch 1967, Thompson 1967, Argote
1982, Volberda 1996).
Albert and Peter worked for the same firm in similar
environments, characterized by demands for cost savings
while at the same time growing technological competen-
cies and customizing services to address everchanging
needs. Albert’s approach was organic, while Peter’s was
more mechanistic. Albert viewed SIT’s tasks as highly
varied, while Peter viewed them as routine.
Like SIT, IT departments and external vendors have
long faced technological and business changes (Kraut
and Streeter 1995). To deal with change, some IT orga-
nizations build close organic relationships with clients
(see Clark et al. 1997, Cross et al. 1997, El Sawy et al.
1999). Others try building close client relationships, but
struggle to contain costs and are eventually outsourced
(Levina and Ross 2003). Many successful IT service
vendors have prospered by relying on highly codified
maintenance and development activities (Garud et al.
2003, Levina and Ross 2003). These observations put
into question whether tasks are intrinsically routine or
nonroutine, and whether codification and external envi-
ronmental stability are directly linked.
ServCo’s case suggests that parties in the relationship
collectively define relevant aspects of the environment
and, hence, the appropriate degree of codification. For
Albert, clients, and the CEO, collaboration, customiza-
tion, and flexibility of IT services were more impor-
tant than cost savings in an everchanging world. Peter
ignored prior perceptions of the local SIT’s context and
imposed his vision on clients without discussion. In
communications with the CEO, he focused only on the
anticipated increased efficiency. Restricted communica-
tions with key stakeholders meant Peter did not argue
his case, which focused on codification of project activ-
ities in anticipation of long-term gains through resource
savings and limited IT investments in targeted areas. As
SIT’s work became more mechanistic, clients adjusted
and started making only routine IT requests. Ironi-
cally, by focusing on the big picture, Peter exhibited
reverse “organizational myopia”—the term that refers to
managers ignoring changing environmental conditions
(Leonard-Barton 1992).
Design Implementation Process
The literature on organizational change has ample exam-
ples of delays that prevented designs from being imple-
mented (e.g., Schultze and Boland 2000, Staudenmayer
et al. 2002, Boudreau and Robey 2005). Remarkably,
Peter profoundly transformed SIT’s work practices in a
relatively short period of time.
Peter’s redesign changed the organization because
its components reinforced each other, and supported
his vision for SIT as a cost-efficient service provider
(Nadler and Tushman 1988, Milgrom and Roberts 1995).
Table 1 shows that changes in staffing practices, task
delineation, client relationships, communication prac-
tices, and office space were well aligned (McCann
and Galbraith 1981, Galbraith 1995). Peter also com-
municated changes effectively (Kotter 1995). More-
over, implementing the CPM application and extensive
electronic documentation accelerated the transformation,
while supporting other components of the redesign.
It helped delineate responsibilities for tasks between
design and implementation, avoid reliance on “costly”
interpersonal relationships with clients, and increase
SIT’s control over clients’ technology choices.

10. Vaast and Levina: Organizational Redesign in an IT Organization
Organization Science 17(2), pp. 190–201, © 2006 INFORMS 199
While alignment helped implement rapid changes, it
also eliminated negotiations about alternative designs.
Before CPM, SIT members talked to clients informally
and learn about their “undocumented” concerns. Also,
had more old-timers remained, there could have been
more reports of trouble. Peter’s system and its supporters
highlighted only efficiency.
Multiple Faces of Codification
Codification proved deceiving, as Peter and perma-
nent workers perceived that the changes were working
well and were unaware of clients’ dissatisfaction. They
believed they had created a new reproducible organiza-
tional competence in information system design, with
no external competition and measured improvements
in terms of timeliness and cost savings. Clients per-
ceived that the change was not working because SIT no
longer understood the clients’ needs, was less respon-
sive than external providers, and did not deliver systems
clients could use productively. We explore the multiple
dimensions of codification that resulted in these diverse
perceptions.
Codification and Change in Client’s Interests. SIT’s
managers saw that codification helped IT produce out-
comes more efficiently because they no longer relied
on expensive interpersonal relationships. Clients saw IT
producing the same outcomes even when needs had
changed.
Codification and SIT’s Competence. Many perma-
nent workers appreciated codified relationships with
clients and temporary workers because they could grow
their competencies in IT design. This fit IT profes-
sionals’ belief that competence and satisfaction lie in
producing well-engineered systems (Gouger and Colter
1985, Truex et al. 1999). However, product development
organizations derive superior competencies by deeply
comprehending technological capabilities and clients’
needs (von Hippel 1988). Using technology effectively
depends on users experimenting with systems and IT
professionals closely interacting to adjust systems to
newly discovered needs (Ahituv et al. 1984). For many
clients, a focus on technical design and the departure of
many old-timers erased SIT’s key competence.
Codification and Control over Projects. In SIT’s view,
using CRM to document what clients should control
(systems’ features and delivery deadlines) and decid-
ing on what clients should not control (technological
platforms, system’s features, and delivery processes)
allowed the organization to set priorities and streamline
operations. Prior to Peter’s arrival, SIT personnel and
clients jointly and informally controlled developmen-
tal processes and outcomes. With increased codification,
clients clearly saw that they had little control over many
aspects of processes or outcomes important to them.
Codification and SIT’s Value-Add. In Peter’s view,
codifying coordination practices with clients helped cut
costs and exploit economies of scale by making SIT
more cost competitive than alternative service providers.
For clients, codification erased SIT’s unique value-add,
which was based on interpersonal relationships, and led
them to seek external IT service providers to replace the
“faceless” internal provider. Codification also lowered
outsourcing transaction costs as business units learned to
specify their requirements in formal terms, thus easing
coordination with external vendors (Nam et al. 1996). As
the department no longer delivered unique value based
on interpersonal service, it had to compete with external
vendors who had greater economies of scale, scope, and
expertise (Levina and Ross 2003, Gurbaxani and Jorion
2005).
Codification and Performance Assessment. Peter per-
ceived that his changes were effective because there was
no deviation from his envisioned design (all pieces of the
transformation worked well together and reinforced cod-
ification) or expected outcomes (technological priorities
were set, costs saved, and on-time delivery achieved).
Codification, however, highlighted positive aspects of
transformation while hiding client’s views and priori-
ties. Peter was blinded to clients’ views by the very
codes he had created to judge performance. Overzeal-
ous reliance on CPM, along with the new segregation of
temporary workers, eliminated feedback. Unfortunately,
SIT learned about its shortcomings too late.
Implications and Future Directions
Leo Tolstoy wrote that “every unhappy family is
unhappy in its own way” (1886). Similarly, organi-
zational failures have their own idiosyncrasies, yet
in-depth examinations of single cases reveal particular-
ities beyond a given context (March et al. 1991). The
SIT case revealed key insights concerning design, imple-
mentation, and consequences of increased codification
for support organizations.
Analysis of this case suggests that, in choosing an
appropriate degree of codification, support organiza-
tion designers cannot merely react to seemingly objec-
tive external environmental conditions. Organizational
designs emerge from historically and socially embedded
relationships between designers and stakeholders, rather
than as straightforward responses to environmental con-
ditions. Environments are everchanging social construc-
tions and require collective action to mutually define
and address uncertainties (Tsoukas 1996, Grandori and
Kogut 2002). Designers need to communicate and con-
vince others of their views of the environment and the
proper design, as well as discuss and possibly renegoti-
ate these views.
The paper highlights the dangers of a well-
aligned, perfectly implemented organizational design

11. Vaast and Levina: Organizational Redesign in an IT Organization
200 Organization Science 17(2), pp. 190–201, © 2006 INFORMS
that focused on increased codification of activities.
While different components of the highly codified design
reinforced each other and speeded the transformation
(Nadler and Tushman 1988, Milgrom and Roberts 1995),
this integrated vision blinded its designer to design
flaws. Our work recommends that managers implement
change slowly and incrementally (Nystrom and Starbuck
1981), and suggests that managers should be particularly
cautious when all components are aligned around codi-
fied activities. Designs are usually not so simple.
Increased codification also impacts the mechanisms
and nature of control between the support organization
and various stakeholders (Kirsch 1996). If control is not
fairly distributed, the increased transparency of control
mechanisms may expose inequities and lead those stake-
holders who feel disadvantaged to fight back. One of the
reasons why highly codified relationships may work bet-
ter with external rather than internal service providers is
that through the contractual structures clients typically
retain control over issues that matter to them the most
(Levina and Ross 2003).
Finally, this paper showed how increased codifica-
tion can prove a mixed blessing for support organiza-
tions. At the firm level, scholars have highlighted the
risks and benefits of codifying cross-functional rela-
tionships (Kogut and Zander 1992, Hansen and Nohria
2004). A strategy based on interpersonal relationships
limits growth because such relationships are difficult
to replicate. Codifying lateral relationships, however,
increases the risk of strategic innovations being imitated
by competitors (Kogut and Zander 1992). For support
organizations, codifying may help these organizations
compete with external vendors by streamlining pre-
dictable activities, focusing on technical competencies,
and creating accountability. However, with increased
codification, support organizations risk being outsourced
as their unique value-add diminishes, loyalty erodes, and
transaction costs of outsourcing decrease.
We have argued how codification in organizational
design had multiple faces, and how the organization
designer and his supporters were blinded by the seem-
ingly perfect transformation. Most studies of organiza-
tional redesigns highlight how difficult it is to change
the organization due to resistance and inertia (Kotter
1995). Some scholars even say that organizations never
change in profound ways (Hannan and Freeman 1984).
Mainstream literature often focuses on aligning multi-
ple design components and getting consensus about the
change (Nadler 1988). Our study suggests that some
resistance to change may be prudent. Organizations may
want to maintain pockets of resistance to highly codified
designs in the form of loyal, but defiant, subordinates
or customers who are communicating important design
elements that the overall design vision may need to take
into account.
Acknowledgments
The authors would like to thank Roger Dunbar and three
anonymous reviewers for their invaluable help in developing
the ideas in this paper. Special thanks also go to Joan Dunbar
for her excellent editing of the manuscript. This work was
sponsored in part by the CRG, École Polytechnique, Paris,
France, and Alfred P. Sloan Foundation Industry Studies Fel-
lowship. The authors have contributed equally to the paper.
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