Restructuring — put strategy first

Whether the desire is to cut cost, support a new strategic direction or respond to significant change in the market, frequently an organisation’s first response is to restructure.  Restructures often look sensible and even painless at the “PowerPoint level”.  However, deep in the organisation, where the work gets done, confusion, missed opportunity, loss of talent and waste can abound.

The same goes for restructures within the IT organisation.  The economic climate continues to be challenging.  When responding to the Gartner Executive Programs CIO Agenda survey in December 2008, more than half of the CIOs surveyed in Australia and New Zealand expected their IT budgets to grow slightly in the coming year.  Results just in from the survey conducted at the end of Q1 indicates CIOs now expect a contraction in excess of 4 percent. 

With the bulk of the average IT budget supporting fixed costs that require a long lead time to reduce, many CIOs look to reduce the size of their IT teams to extract short-term savings.  This is the unfortunate intersection of market conditions and the way most IT budgets are structured.

To ensure your restructure is successful – in terms of supporting the business and delivering quality IT services, while maintaining focus and minimising distraction, and dealing with the issues your people experience fairly and transparently – a few basic principles should be followed.

Most importantly, structure should follow strategy.  Successful restructures faithfully observe this principle.  The CIO needs to be clear about the strategic objectives of the IT department – and then design a structure to support those objectives.  This will form a platform on which to base the restructure, and ensure that the restructure can be understood by those involved and affected.

As a simple example, if improving business understanding and service culture is an objective for your IT department, consider where the service desk is best positioned in your new structure.  Should it be part of your infrastructure team, the applications team or should it reside within the solution delivery team responsible for managing the business relationship?  Compare this positioning with a structure to support an objective to drive timeliness, reliability and rigour in the delivery of hardware and software to the organisation. 

I once managed a large IT department that had great technical capability within its service desk team.  The service desk reported in through the Infrastructure department within IT.  Its approach had been honed to technical perfection. 

However, a distinct lack of understanding of the processes and priorities of the wider organisation inhibited its ability to provide the type of service that the business demanded.  Reorganising the reporting lines and positioning it as part of the most customer-facing department within IT improved not only the perception of the service desk but of the whole IT organisation.

With any change to structure, people considerations are paramount.  This cannot be stressed highly enough.  However, which roles specific people occupy within the new IT organisation should be considered only when design principles have been articulated, and the preferred structure drafted.  At this time, tweaks to the structure may need to be made in order to ensure top talent, and those with critical knowledge and skill, are retained.  However this should not be the consideration that drives the design of the new structure.  

Don’t start with an assessment of “who should stay and who should go”.   This approach smacks of favouritism and lacks the logic of linking changes back to the IT strategy.  Using the IT strategy as a basis for organisational redesign provides a defensible context for change.

Once the strategy, design principles and structure can be communicated, the challenge of keeping the IT show on the road during a turbulent period starts.  The best approach for managing this, like any difficult IT project, is to identify all stakeholders, devise a communication plan which takes into account the particular interests of each stakeholder group, and put in place an implementation plan which has been quality reviewed and desk-checked. 

And that implementation plan needs to be as swift as practicable without sacrificing the quality of the outcomes.  A restructure that takes longer than is absolutely necessary benefits no-one – least of all those who may be negatively impacted.

The right structure has the potential to release the power of the talent within the IT department.  I once joined an organisation with the brief from the CEO that the IT department needed to be “fixed”.  The CEO wanted talented, committed and capable people within the IT department.  I was charged with taking out the non-performers and ensuring the department was appropriately staffed. 

What I found when I started was surprising.  The department was indeed already staffed by talented, committed and capable people – who knew the business well, were dedicated to its success and eager to be recognised for the professionals they were.  The successful operation of the IT department was inhibited by the structure, which had been devised by cronyism not strategy.

If, like many CIOs, you are faced with the big ‘R’ word this year, focus on strategy first, then structure, then people. By doing this, it is possible to deliver improvements in service delivery even in a time of enormous change.

(Linda Price is group vice-president of executive programs, Gartner. The ideas and views expressed in this article are those of the author and do not necessarily represent the views of CyberMedia)