The Built-to-Purpose IT Organization

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1 G The Built-to-Purpose IT Organization Published: 25 October 2012 Analyst(s): John Mahoney, Colleen M. Young We outline how to optimize the design and orchestration of the IT organization using the four futures of IT to identify the best choices for different IT value contributions. Key Findings An IT organization's fitness for purpose is based on the degree to which it delivers against the enterprise's expected outcomes and value. There's no single correct solution that's right for all enterprises and IT organizations, and the optimal solution for each enterprise changes over time. As the role of IT in business develops and transforms, optimizing the IT organization's structure becomes more important and complex, needing more frequent review. The final choice of IT organization and structure depends on the way the enterprise uses IT. Blended choices are typically necessary in an increasing number of enterprises. Effective IT organization design and orchestration does not assume that the enterprise knows what it wants; the optimum process of designing the organization of IT includes showing the enterprise what kind of IT organization it could have. Recommendations Optimize IT organization structure in relation to the value the enterprise expects from IT. Ensure that the structural arrangement of IT relates to the assets to be optimized. Typical options are technology, business alignment, IT service, or business information and processes. Use enterprise style, business drivers and goals to determine the right IT organizational choice. Table of Contents Analysis...2 Introduction... 2

2 Purpose Must Drive Organization...3 Road Map for Building IT Organization Structure... 4 Principles, Tools and Techniques for Organizing IT... 5 Line Management Roles and Structures... 5 Delivery Roles and Structures... 6 Governance Roles and Structures... 8 Blending the Tools and Techniques: Balancing the Pros and Cons...10 Case Examples of Blending the Tools and Techniques A Construction Company IT as the Engine Room...12 A Consumer Packaged Goods Company Needs to Blend IT as Engine Room, IT as Global Service Provider and/or IT "Is" the A Media Company Needs to Use All Four Futures of IT...16 Appendix: The Four Futures of IT...18 IT as Engine Room IT as Global Service Provider IT "Is" the...19 Everyone's IT...19 Recommended Reading...20 List of Figures Figure 1. Road Map for Building IT Organization Structure...4 Figure 2. Balancing the Pros and Cons...11 Figure 3. Organization Choices for Case Example Construction Company...13 Figure 4. Organization Choices for Case Example Consumer Packaged Goods Company...15 Figure 5. Organization Choices for Case Example Media Company Figure 6. Where the Enterprise Focuses IT's Attention Drives the Four Futures of IT Analysis Introduction IT organizations are in transition toward more strategic business contribution roles and away from a predominating focus on the delivery of technology services. It's clear that many IT organizations are already changing their roles, and that the majority will do so by the end of the decade. The Appendix outlines the four futures of IT the four styles for organizing and exploiting IT within an enterprise that will characterize the purpose and deployment of IT over the next few years. We Page 2 of 21 Gartner, Inc. G

3 use those four styles in the present research to analyze and describe the best practices for optimizing the design of IT organizations to deliver against their explicit purposes. In this research, we use the term "organization" to include not just line management structures, but also delivery models, governance and decision-making arrangements. All three must be effective and mutually aligned for any enterprise to operate its IT capabilities successfully. Purpose Must Drive Organization The purpose that is, the outcome it is expected to optimize of every IT organization in the enterprise must drive its structure. Each organization must be engineered to deliver against measurable business-oriented outcomes (see "The Gartner Value Model: A Framework for Measuring Performance" and "Running IT Like a 2.0: The Service-Optimizing IT Delivery Model" for how to articulate IT's performance in terms of measurable business outcomes). More and more enterprises are expecting their IT organizations to play multiple roles, offer multiple value propositions and deliver more varied types of contribution from technology investments. These roles and value propositions are captured in the four IT futures, which can occur singly or in any combination. Since some combinations are more synergistic than others, this emerging trend presents enterprises and IT with new choices and challenges, such as: How many roles can a single IT organization fulfill, and are certain role combinations fundamentally incompatible? Where is the break point beyond which large IT organizations need to divide to address multiple roles, rather than blend them? How will interdependencies and conflicting agendas across multiple IT organizations be addressed? Our research and surveys about the changing shape of IT point to two dominant structural outcomes over the next few years: 1. The divided IT organization Many large IT organizations will divide into multiple parts, each with a different structure aligned to its distinct purpose. The most dominant combination is one IT organization working on sourcing, brokering and delivering infrastructure, and the other working on innovative, differentiating capabilities in relation to the critical business assets of business information, business processes and business relationships. 2. The blended IT organization IT organizations that remain fully centralized will have to compromise and blend roles. They must become increasingly sophisticated in managing complexity and structurally orchestrating their capabilities to optimize the prevalent balance of business expectations at any point in time. While the existence of multiple IT organizations within an enterprise is not new, their conscious realignment, differentiated value propositions, unique structures and distinctly separate agendas will give rise to new challenges of coordination, performance management and governance. Similarly, centralized IT organizations are well-known, but the requirement to seamlessly "be all things to all Gartner, Inc. G Page 3 of 21

4 people" means the performance bar has been raised much higher. In either case, it's not the same old choice of centralization versus decentralization. The four futures and the fact that a single enterprise probably wants more than one (if not all) means the task of structurally optimizing IT is now much more difficult. Road Map for Building IT Organization Structure The continuing evolution of the role and structure of IT and the consequent blended nature of many IT organization structures mean that such decisions cannot be made only once. Engineering to explicit performance metrics means continuously improving structure as necessary in pursuit of those measurable goals or as the goals themselves change. Designing an IT organization is a continual process. Moreover, many enterprises are unaware of the true power and extent of the value that an improved organization of IT could deliver. The process of designing and building to purpose an IT organization, therefore, needs to include a dialogue with other enterprise leaders about the possible changed or additional purposes that IT and the IT organization(s) could contribute to the enterprise. It's not sufficient to build an IT organization to meet the same purpose it's historically delivered or a purpose that's tacitly assumed, not explicitly decided. CIOs must take the lead in developing this dialogue and orchestrating and conducting the process of organizational design and decision. Figure 1 shows a high-level road map for the process of designing an IT organization. Figure 1. Road Map for Building IT Organization Structure Discuss business intentions for technology to determine IT's future purpose; find which of the four futures of IT matches best. Start Shortlist tools, techniques and structures for delivery, line management and governance. Refine Use business priorities to blend and optimize the structure, balancing pros and cons of shortlisted options. Source: Gartner (October 2012) Page 4 of 21 Gartner, Inc. G

5 Principles, Tools and Techniques for Organizing IT Three aspects of organization provide the main principles for building an IT organization to meet its intended purpose: Line management roles and structures Delivery roles and structures Governance roles and structures We'll look at each in turn, and in the following section, we'll look at how to blend them to achieve an optimized organization. Line Management Roles and Structures There are three main options for line management structures of IT organizations. Technically aligned Grouping technology and other capabilities in competency centers based on IT functions, IT processes and expertise related to activities such as application development and security management. unit aligned Focused on lines of business, products and/or geographic structure. Grouping together the people whose work is dedicated wholly or mostly to specific organization units in the enterprise as a whole and/or whose work relates to specific geographic locations of enterprise activities, sometimes supported by a centralized IT organization for those things that are "shared." process aligned Integrated business process or service teams, aligned with end-toend enterprise business processes and/or business information requirements, grouping together the people responsible for executing related processes/services or sustaining a business information asset. The rationale driving the choice is to identify the outcomes or business assets that are most important for the IT organization to maximize (see "First Catch Your Assets: Map Their IT Dependencies to Strategize for Value " and "Strategic Decisions for Optimal IT Service Management"). This decision comes first, because the arrangement of an IT organization determines which technology, people, services and process assets are developed and exploited. The final choice almost always involves a trade-off a judgment about which asset class is the most important. But it's a judgment that has to be made. Ultimately, you can have only one mainline management structure, and matrix dimensions need to be used to take care of other important factors. Technically Aligned Almost all original IT organizations from the 1960s onward used technology as their primary principle of arrangement. They had sections dealing with hardware and software, communications, security, and so on. That allowed the expensive and scarce assets of equipment, software and Gartner, Inc. G Page 5 of 21

6 technical skills to be consolidated and exploited to the fullest extent. This remains the most common structural choice, but it is lessening. It will be the least used by 2020, because it has significant drawbacks for delivering quality. Human resources arranged in functional or technical silos generally have no accountability for, or insight into, the specific results that are being delivered. The overall integration required to deliver effective outcomes falls through the gaps in the organizational model. As a result, technology silos are often augmented by secondary structures, typically either horizontally aligned process execution teams and/or a business relationship management function to provide a single point of contact between internal clients and the IT organization. We'll examine the pros and cons of these structures in the following paragraphs. Unit (BU) Aligned BU structure is the second most popular at present. It is sometimes implemented by locating IT within each part of the business. When there is no shared IT provider within the enterprise, this structure is known as a "decentralized" or "multilocal" IT model. When there are some distributed and some centralized IT providers, this structure is known as a federated model or hybrid model, in which the centralized organization is a service organization mandated to run like a competitive service provider. Typically, in a federated model, there is some kind of matrix relationship between the several IT organizations. For further discussion of these models and their pros and cons, see "How to Best Position the IT Organization in Your Enterprise" and "Running IT Like a 2.0: The Service-Optimizing IT Delivery Model." Process Aligned The strongest growth, particularly in leading organizations, will be in arrangements based on integrated, end-to-end business services; product lines; or business process and information assets. The term "value" is loosely used to describe those models that leverage IT for clear enterprise competitive advantage. The value category has many models, of which none dominate, but all focus on maximizing opportunity. Value model examples include the IT organization as a line of business or a spinoff; the IT organization that owns and executes core business processes, such as supply chain; the IT organization as an R&D lab; or an IT organization that is fully "fused" with the business, operating more as a revenue center and key innovation contributor than as a cost center. The unique attribute of the value models is that they can explicitly quantify their financial contributions to the enterprise from a bottom-line and a top-line perspective. In for-profit terms, this means they have clear visibility into IT's contribution to business outcomes and revenue, as well as costs. This model is rare and generally only seen in high-tech companies or in industries where the typical products and services are information-based, such as financial services (see "Fusing IT With the : The Value-Optimizing IT Delivery Model" and "Exploring the Future: IT Is the "). Delivery Roles and Structures We'll examine each of the three main options: IT capability Competitive services Page 6 of 21 Gartner, Inc. G

7 value IT Capability IT organizations focused on IT capabilities are in the traditional role of IT as a utility provider, but they've adopted disciplined processes and performance management, and they've become extremely adept at managing the life cycle of a strategic and robust IT architecture. As a result, they can deliver predictable, repeatable outcomes for fundamental, core IT processes, as well as adaptive IT infrastructure capabilities that can adjust to enterprise cycles and changing requirements. This option implies a number of subtle, but crucial concepts. First, to optimize process outcomes, people must be aligned with processes, rather than functions. This leads to an organizational construct (whether permanent or matrixed) where siloed structures and rewards based on individual skill attainment give way to team-based structures and rewards based on results. In other words, people and their skills are taken out of their technology silos and redistributed into multidisciplinary teams. This is a huge cultural shift. It also means head counts and some costs can go up. In an organization that is predominantly efficiency- and cost-oriented, this may seem counterintuitive. IT leaders pursuing this choice must understand that, while their basic efficiency-oriented value proposition has not changed, the manner in which they deliver it has. In this choice, efficiency is pursued by eliminating the opportunity costs of unpredictable and unrepeatable results, rather than by increasing the marginal return on IT assets. Finally, IT organizations facing this choice are, by nature, focused on their own back office, rather than a business consumer's experience of their services. This often results in confusion and misrepresentation around customer identification (someone in the business or another IT team) and what their services really are (what they do, versus how they do it). This lack of clarity tends to permeate most IT communications and behaviors, perpetuating credibility issues and enterprise claims that IT doesn't understand the business. To counteract this, the IT-capability-focused organization must generally partner with another IT organization that is closer to the business and manage its own performance as a contributing enabler to that other IT organization's performance objectives. Competitive Services IT organizations pursuing the competitive service route essentially run like a service business. They formally articulate and charge for all their services, know their internal markets and customers, understand their core competencies and value propositions, source appropriately based on a competitive understanding of their strengths and weaknesses, and strategically manage their service and product offerings. This choice requires IT to wrap business, stakeholder and relationship management competencies around a core delivery capability to develop a front office, if you will. IT has the delivery capability to stand behind its performance commitments, and the business management capability to ensure Gartner, Inc. G Page 7 of 21

8 it is offering the right products at the right price and quality levels for its internal market. By definition, it is multisourced. No IT organization can be world class in every service. By knowing its relative strengths and weaknesses, the IT organization pursuing this choice can subcontract to address subpar performance areas, thereby ensuring that the enterprise has the advantage of a fully optimized service portfolio. It requires IT to start with enterprise needs and expectations, working back in to the IT organization to ensure that processes, resources, tools, systems and so forth are aligned with contracted service levels. The opportunity cost associated with this choice is that it uses marketlike forces to compensate for the lack of effective demand governance by using price (chargeback), rather than collaboration, to drive effective consumption patterns. This may mean that the IT organization declines to address or support demands that fall outside its service portfolio, and that the enterprise has the option to go outside if the IT organization cannot deliver. Finally, it also entrenches an inherent supplier/provider relationship. A byproduct of this is that IT will never have any more influence over the enterprise than the best external service provider, and that IT ultimately allows the enterprise to make its own decisions, even if they are (in IT's opinion) a mistake. Value IT organizations pursuing this choice are going beyond the "arm's length" relationship between IT and the rest of the business that typically institutionalizes some level of lag and perpetuates the "us versus them" mentality common in so many enterprises. This choice optimizes the value the enterprise receives from its IT investments. It is generally focused on delivering some sort of high-level, sticky competitive advantage through IT. IT organizations with this option are fully fused into the core of the enterprise. There is no "us versus them;" IT considerations are as much a factor in strategic decision making as financial considerations. In this choice, there may not even be a traditional IT organization, and the CIO may have morphed into a COO, chief change strategist or some other role focused on the strategic viability of the enterprise. Governance Roles and Structures There are three main options for governance roles and structures: Central Distributed Enabling The centralized versus local or regional strategies of the enterprises steer IT organizations to take a central or distributed approach to IT governance. In addition, IT organizations must consider the expected role of IT in the business, because this will influence how the business engages with IT Page 8 of 21 Gartner, Inc. G

9 governance. However, there is more to IT governance than simply following the lead of the business strategy. IT leaders must look at the specific elements of IT governance and determine which elements must be centrally managed and which distributed. The overriding rule is that IT governance should match the orientation of the enterprise as a whole. Differences generate serious risk of misalignment, poor value and organizational friction. Therefore, any deviation of IT position from what the business orientation indicates should be for wellunderstood and explicitly managed reasons. The situation in some enterprises will mean that no single position is indicated. In such cases, the final choice must reflect the strongest business orientation and intended IT contribution, as well as organizational and political realities of the situation. In complex enterprises, there may be a mix of styles, such as the situation in the case example of the media company in this research. Central Governance Centralized enterprises are strongly pressured to provide enterprisewide integration. There is little perceived need for local responsiveness to individual business units or locales. They strive to provide consistent product and customer experiences and to maximize synergies by centralizing assets and capabilities. An example is an airline seeking to offer a common experience around the globe. Central governance, therefore, creates single corporate points of control and authority over virtually every aspect of technology, including strategy, infrastructure services, application delivery, budgets and resources. Those points of control and authority are implemented through centralized process and structures typically, but not always, through steering committees, service management groups and project boards. Distributed Governance Distributed enterprises are strongly pressured to respond to the needs of individual companies, business units and/or locales. They build strong local bases and emphasize local self-sufficiency. Assets are decentralized. In fact, local businesses may be managed as a portfolio with very little standardization. Accordingly, distributed governance creates multiple points of control and authority for most or all aspects of IT. They are implemented through processes and structures whose style and operation reflect the needs and management approaches of the various parts of the enterprise. Consequently, they may be substantially different between different parts of the distributed enterprise, because the basic requirement is to align optimally with the specific needs of each operating unit or locale. Enabling Governance An emerging alternative in enterprises that are strongly pressured to deliver innovation, creativity and agility is to use governance that enables those things, rather than attempting top-down, predetermined directions. This governance style is at least in part a response to the issue of "shadow IT," but without the negative connotations of that term. Also, it follows from the consumerization of IT. However, the enabling style is broader than consumerization, because it may include professional-grade hardware, software and services acquired and managed outside the Gartner, Inc. G Page 9 of 21

10 formal IT organization, such as in areas of operational technology, but not just in such situations. The enabling style of governance allows CIOs to take a constructive role that ensures everyone is aligned with a common plan, rather than appearing to police any IT that is outside their department. In other words, the style called "enabling governance" is primarily about coordination, creativity and collaboration against defined business goals. It is not about control and ownership. Blending the Tools and Techniques: Balancing the Pros and Cons Figure 2 shows the best, intermediate and contraindicated choices of organizational attributes for each of the four futures. The symbol indicates a good choice, the symbol indicates an adequate choice and the symbol indicates a poor choice. Page 10 of 21 Gartner, Inc. G

11 Figure 2. Balancing the Pros and Cons Technically Aligned Line Management Delivery Role Governance Unit Aligned Process Aligned IT Capability Competitive Services Value Central Distributed Enabling IT as Engine Room J L K J K L J K L IT as Global Service Provider K L J K J L J K L IT "Is" the L J K K K J L J K Everyone's IT L J K K J J L K J Source: Gartner (October 2012) Gartner, Inc. G Page 11 of 21

12 Case Examples of Blending the Tools and Techniques A Construction Company IT as the Engine Room Global construction companies, such as those that build large public infrastructures, live and die by the speed with which they can engineer solutions, the accuracy of their bids, their ability to navigate complex international and governmental conventions, and the effectiveness of their logistics and project management in the field. Because bid speed and accuracy are so crucial, and so dependent on engineering specifications, design and proposal processes are tightly integrated and often enabled by proprietary platforms and solutions. They often employ "follow the sun" practices, yet the remote location of many of their projects and personnel complicates their success. In such an enterprise, IT might provide a global, "always on" collaborative engineering platform and a robust project costing system, both of which could be proprietary. The collaboration platform might be highly specialized to compensate for the variability of infrastructure quality and availability. Because information and data integrity is crucial to accurate project costing and bidding, a single system of record would be precisely maintained and controlled. IT would be expected to maintain extensive information security protection. The nature of this business and its dependence on specific, specialized assets is such that it manages its core capabilities and critical information centrally in order to minimize cost and control risk. IT is structurally aligned and managed in a manner consistent with this cultural and economic reality. Its line management roles and structures are technically aligned to ensure optimal efficiency and availability of key business assets; its delivery role is focused on highly reliable, somewhat specialized, IT capabilities; and its governance is centralized so that any IT-related decisions can be made to ensure that IT-enabled business assets are globally consistent, efficient and reliable, and secure (see Figure 3). Page 12 of 21 Gartner, Inc. G

13 Figure 3. Organization Choices for Case Example Construction Company Technically Aligned Line Management Delivery Role Governance Unit Aligned Process Aligned IT Capability Competitive Services Value Central Distributed Enabling IT as Engine Room J L K J K L J K L IT as Global Service Provider K L J K J L J K L IT "Is" the L J K K K J L J K Everyone's IT L J K K J J L K J Chosen Organization ü ü ü? Source: Gartner (October 2012) Gartner, Inc. G Page 13 of 21

14 A Consumer Packaged Goods Company Needs to Blend IT as Engine Room, IT as Global Service Provider and/or IT "Is" the A consumer packaged goods company seeking to maximize its market share worldwide will attempt to "think globally, but act locally." While this may seem cliché, the business rationale behind such a goal is reasonable, because it seeks to find an optimal balance between achieving economies of scale around relatively commoditized capabilities and/or assets that are commonly required across its global footprint, while ensuring that business units have the flexibility to adapt practices to local or regional cultures and conditions. This generally translates to a desire to centralize and consolidate internal service functions such as HR, accounting, legal and IT. For the IT organization in such an enterprise, this usually presents three potential scenarios: 1. IT is as engine room and global service provider In this scenario, infrastructure-related IT services are centralized and delivered across the entire enterprise via a competitive service organization, while applications and information-related services are decentralized. In this instance, the infrastructure IT organization must manage its "engine room" in a proactively architected, process-disciplined and optimally sourced manner, while ensuring that it is marketcompetitive on price and quality. It must also interact with lines of business and the distributed IT organizations embedded in business units or regions as a service provider. This IT organization is technically aligned, has a delivery role of competitive service provider and has a governance model that is centralized. The embedded/distributed IT organizations, in turn, operate more or less autonomously, each with a potentially different combination of line management, delivery roles and governance practices commensurate with the nature of the business units they support. 2. The enterprise could pursue horizontal synergies across all internal service functions and realign technically oriented functional departments like IT, HR and real estate around integrated workplace services, or IT, legal and R&D around intellectual property management services. In this permutation, while there is a centralized function that delivers "IT," it would not be IT as we know it, but, rather, a business-process-aligned structure focused on driving and enabling business value. 3. The enterprise might determine that it cannot separate its core or shared business processes from the IT that enables them and, therefore, might create a new, centralized organization responsible for both. The CIO might become a COO who owns end-to-end processes like supply chain or customer relationship management, and is held accountable for direct business results. This IT organization is business-process-aligned, focused on being a competitive service provider and/or delivering business value (depending on the enterprise business process), and is centralized. The traditional IT organization as we think of it might no longer exist, might be outsourced or might revert to a scaled-down IT-as-engine-room structure. What this particular example illustrates is that the optimal combination of line management, delivery role and governance depends explicitly on what the enterprise wants to accomplish (see Figure 4). Page 14 of 21 Gartner, Inc. G

15 Figure 4. Organization Choices for Case Example Consumer Packaged Goods Company Technically Aligned Line Management Delivery Role Governance Unit Aligned Process Aligned IT Capability Competitive Services Value Central Distributed Enabling IT as Engine Room J L K J K L J K L IT as Global Service Provider K L J K J L J K L IT "Is" the L J K K K J L J K Everyone's IT L J K K J J L K J Chosen Organization? ü? ü? ü? Source: Gartner (October 2012) Gartner, Inc. G Page 15 of 21

16 A Media Company Needs to Use All Four Futures of IT Most media companies face huge challenges from new channels, new styles of content acquisition, creation and delivery, global competition, lowered barriers to entry, and rapidly evolving customer expectations. Add to that fundamental changes in the economics of their businesses as sales, sponsorship and advertising revenue realign against new production economics, and you have a business sector's dynamic for which the word "transformation" is barely adequate. Much of that transformation is intimately linked to the use of technology and to the evolution of the technology itself. The hot spots where technology and business transformation need particular integration include: Cultural and behavioral changes to enable and align self-managed communities of content creators and creative artists, not only within the enterprise, but also across the broader business ecosystem architecture to facilitate creation and exploitation of information, content and process assets Establishment of mutually contributing partnerships to drive innovation and productivity between IT professionals and media "creatives" Sustained top management support and vision, cascaded throughout the business The consequences for the IT organization are broad and deep. There's typically a need to operate in all four IT futures, although the dominant ones are IT "is" the business for assembly and delivery of the enterprise's mainstream products and services and everyone's IT for innovation, for interaction with multiple dynamic external contributors and consumers, and to service the work styles of many tech-savvy media creatives (see Figure 5). Page 16 of 21 Gartner, Inc. G

17 Figure 5. Organization Choices for Case Example Media Company Technically Aligned Line Management Delivery Role Governance Unit Aligned Process Aligned IT Capability Competitive Services Value Central Distributed Enabling IT as Engine Room J L K J K L J K L IT as Global Service Provider K L J K J L J K L IT "Is" the L J K K K J L J K Everyone's IT L J K K J J L K J Chosen Organization Source: Gartner (October 2012) ü Hybrid Hybrid ü ü ü ü Gartner, Inc. G Page 17 of 21

18 Appendix: The Four Futures of IT The traditional mandate of enterprise IT is under pressure due to increasing role plurality. Four role and relationship paradigms are emerging as the most dominant enterprise contexts for the IT organization. As enterprises confront global economic uncertainty, changing market dynamics and discontinuities created by technology-leveraged cultural trends and different parts of the enterprise require different ways of interacting with IT. Diversity of culture, maturity and risk tolerance across the enterprise add further complexity, such that the IT organization's purpose in any given enterprise is becoming muddled. The question arises, "What exactly is IT?" At least four IT role and relationship paradigms have emerged in response to this question, each of which has different implications for the competitive stance or mission of the enterprise, the form and effectiveness of the IT organization, and the business impact and future of the CIO and IT workforce. The matrix in Figure 6 illustrates where each of the four emerging models has its "sweet spot." Figure 6. Where the Enterprise Focuses IT's Attention Drives the Four Futures of IT Externally Focused IT as Global Service Provider IT "Is" the Focus Internally Focused IT as Engine Room Everyone's IT Source: Gartner (October 2012) Operational Transformational Orientation The characteristics of each of the futures are summarized below. See Recommended Reading for more details. IT as Engine Room The IT engine room rapidly delivers IT capabilities at market-competitive prices. It succeeds by monitoring technology and market developments, and building expertise in IT asset optimization, sourcing and vendor management, and IT financial management: Page 18 of 21 Gartner, Inc. G

19 Delivers ongoing cost improvement Seeks new ways to deliver the same IT capabilities for less Highly responsive to changing business needs Is not just about cloud IT as Global Service Provider IT as a global service provider is an expanded and integrated shared-service organization that runs like a business, delivering IT services and enterprise business processes: Virtual, centralized organization Focuses the business areas Adopts a marketing perspective Leverages its internal position Delivers competitive services Aims increased business value IT "Is" the Above all, the rationale for this structure is about differentiation. Information is the explicit product of the organization or is inseparable from the product: The enterprise is structured around information flow (not process or function). The IT organization innovates within the value chain, not just enables supporting services found in every enterprise. Everyone's IT In everyone's IT, information and technology are used aggressively by business leaders and individual contributors to break through the traditional perimeters of business and to drive ambitious collaboration: The purpose focuses on information, not technology, and on the whole value chain. Leaders develop and promote personal productivity and codes of conduct/information sharing. High-maturity enterprises embrace this divergent model for its collaborative and innovative potential, and it is enterprise-neutral. Traditionalists see anarchy; others see liberated creativity. Gartner, Inc. G Page 19 of 21

20 Everyone's IT works in nontraditional situations: dynamic businesses, startups and R&D/ entrepreneurial/community ventures. Everyone's IT has shared purpose and systematic value capture, not the same as shadow IT. Recommended Reading Some documents may not be available as part of your current Gartner subscription. "Four Potential Futures for the IT Organization" "Exploring the Future: IT as Engine Room" "Exploring the Future: IT as Global Service Provider" "Exploring the Future: IT Is the " "Exploring the Future: Everyone's IT" "CIOs Must Manage Outcomes, Not IT Organizational Reporting Lines" "Accelerate Maturity by Building Critical IT Roles at the Right Time" "Effective IT Organizations: Design Matters" "Practical Governance" "IT Organizational Design CIO Desk Reference Chapter 28, Updated Q4 2010" "Leadership Development Module 4, Chapter 6: Effective IT Organizational Design" "Principles and Options for Choosing the Location and Role of an IT Organization" "IT Organizational Design CIO Desk Reference Chapter 28, Updated Q4 2010" "Introducing the Gartner Model Framework" Evidence This research draws on discussions with CIOs and other enterprise executives from 2008 to 2012, on Gartner's 2012 CIO survey, and on contributions from analysts in Europe, North and South America, Australia, and China. Page 20 of 21 Gartner, Inc. G

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