[MUSIC] When I was leading the research for BCG on IT organization, I had one question that everyone asked me all the time. What is a right IT organization? I'm sorry to say there is no right answer. It all depends. You could say, or you could argue, it's a consultant answer. But let me explain to you. The right IT organization should be in line with the goal of the organization. If the goal of the organization is a business goal, for example, to reduce costs, then I would argue that you have to have an IT organization which enables a business to reduce costs. What can the IT organization do? Well, maybe the IT organization can simplify, can reduce. Can your application against application. In order to be able to externalize, industrialize, simplify, then maybe the good IT organization should be centralized, because then they would have the leaders and the power to do it. If, on the contrary, the goal of the business is to increase sales, to go into new territories, to do new business you need all new products, or to go into China, then maybe the best thing is to have a very active organization. Then maybe IT organization should be as close to the business as possible. It's a very different type of organization. I think that one of the most difficult things about IT organization is what to think about it. For many people, IT organization is about structure. And when a new CEO comes in, what he wants to do is change the structure, or what she wants to do. The reality is a bit more complex. As you see, one way to think about is this Greek Temple. A nice organization makes to simplify you could be metaphorical used. One that you could call centralization. What type of system do you want to build as a business. And there's one which is about the boundaries where do you want to catch the organization. A third one, which should be about controlling. What do you want to control within your IT organization and outside the IT organization. And the last one about your hierarchy, how many managers do you need and do you want to have in your IT organization. It's very simplified, of course, but along these pillars you can ask the right questions to design an IT organization. But remember, a good IT organization starts with the temple and the height of the temple. What is the goal of the business? And then you have the goal of the IT organization. Let's start with the first pillar. To think about the first pillar, the best ideas coming from MIT. MIT CISR, which is the Center for Information Research. MIT has come up with this matrix along two dimensions. The first dimension, on the horizontal axis, is the standardization of your processes. Do you need to have processed standardized or not? The second axis, the vertical axis, is about the sharing of information. Across your processes, do you need or not to share information? Let's take, for example, an investment bank with clients all over the world. I would go then to the top-right corner of the metrics. My investment bank has clients in many continents, and they have the same needs. And wherever the clients are, they should be treated with exactly the same processes. In this case, your ICT stem should have the same systems everywhere, and be able to share information between different countries or different business units. Because if my client has an issue with the balance sheet or the P&L or whatever, we should understand what is happening across the globe for all these clients, and be able to answer to him. So then, the goal of the IT organization should be both to define IT systems that can answer this need. If I go then to the right on side of the metrics on the bottom part. It's a place where I should standardized application, but maybe not sharing information. Next thing, for example, a fast food chain. In a fast food chain the goal is to open new countries, and when they open a new country to minimize the cost of opening a new country. But I don't care about sharing information from my clients between China and Brazil. So what I want to have is a system that can scale up for Brazil or for China, but not sharing information. IT department should be able to do it. So when you think about an IT organization, the first thing is to think about what system you need to build. And then to derive what type of organization you need to have. The second pillar is about the boundaries. Where should I get the IT organization? By the way, this is one of the most interesting question at the organization. What's make an organization? What are the boundaries of an organization? Should we have many IT people in the business? Should we have many business people in IT? It's a good question. And again, the answer might depends depending on what you want to do with the business. As a rule of thumb, I would add that I like clean IT organization. Where basically, you have a small number of business people as of the IT and a lot of people in the IT department. But the interface between the IT and the business should be as small as possible to have all the work. Controlling. I would add that control towers are one of the most important parts of IT organization. If I want to be really I don't care about IT organization in terms of structure. I think you can manage much better what ever structure is the right control tower and is the right processes. So this one is very important, what are the control tower unique to an IT organization. Some people would say the first control tower is about money, and of course it's very important. You need to know how much you spend every month, what you have to spend for the next, until the end of the year, and also multi-year view. So second one is the application landscape and the technical landscape. How many applications do you have? What technical landscape do you have? How do you want to transform it? It's under the control tower. Of course, there is a project portfolio. Something that we've discussed earlier. It should be reviewed every three months. How many projects do you have? When do you start projects? Then there is a people control tower. How many people do you have? If I may say so, one of the strangest questions you can ask is how many people are working today in my IT organization. It will take a bit of time I think to get the answer, but it is important. And then finally, the last point is about sourcing. You should have a control about sourcing, making sure that you usually have more than 100 companies working for your IT organization. How much are you satisfied or not? What is going where, what is not going where? How to improve? How to change something? And finally, the last point is about hierarchy. In an IT organization you have three key roles. The first one, I would say, is project manager. The people who are doing the project. The second one is technical leader, and the last one is managers. There is no particular order in this type of classification, I would doubt that you need the three of them. What we find typically in the organization, is that there is not enough project managers, and not enough technical leaders. And, usually, too many managers. When I look at an IT organization, usually you have one manager for five people. It's a bit, I would say, awkward. You should find 1 for 11 or 1 for 10. And then, if you free up some managers, you can put them back onto project management, or to technical management. Defining the right structure is exactly this. The equilibrium of the roles and the span of control, how many managers for how many people. The rule of thumb, 1 for 10 and 1 for 11 is not to be taken for granted for everything. If you have repetitive task, you should maybe go for 1 to 20. If you're innovating tasks, you should go for 1 for 5 or 1 for 6, but 1 for 11 is a good rule of thumb. With all this in mind, you are now ready to analyze your IT organization. Ask the right question, this is very important. Go and learn the right questions, and then you will find the right organization. So good luck and good questions.
