Building a 21st Century Organization

Building a 21st Century Organization

Introduction

A successful organization in the 21st Century in my opinion is the one which keeps all the organs of its system equipped with the latest technologies and advances made in the field of IT. And therefore, I consider IT function in an organization as the most prominent and difference making sector, so I would base the main focus of this paper on IT's role and its function in making a successful organization in the 21st Century.

The IT function in a Strategic Guidance style IT organization aims to ensure an acceptable minimum level of IT performance across the group's companies. The aim is to encourage propagation of good ideas where possible and to 'fix' the less competent business units on an impromptu basis--rather than necessarily to roll out a common approach to IT management across the group.

Many Strategic Guidance style companies appeared to have evolved from previously decentralized structures. The companies recognized that 'something is lost' when business units have totally autonomous and uncoordinated IT functions. Typical reasons cited were that technology and software diversity precluded systems integration, proliferation of technologies created excessive maintenance and support costs, standards of professionalism varied unacceptably across the business units, and opportunities for cost savings through coordinated procurement were lost.

In seeking to understand these strategic IT management and central IT service roles, it is useful to reflect on the reasons for the existence of an IT function in a multi-business unit company. As Porter (1988) asserts, income is earned by the business units while the corporate head office inevitably adds costs and constraints: 'Corporate strategy cannot succeed unless it truly adds value to business units by providing tangible benefits that offset the inherent costs of lost independence' (Ansoff, 1987).

In a manner similar to corporate strategic management (i.e. the high-level management of a portfolio of businesses), strategic IT management is concerned with the group-wide management of a portfolio of IT resources and capabilities. This involves many activities in common with strategic management, such as; organizational mission and goal formulation, formulation of strategies to achieve goals, strategy implementation, and strategic control.

IT strategy, which defines technology architecture and standards, is common only in Strategic Leadership companies. Strategic Guidance companies tend to agree very high-level standards only--such as to attempt a focus on one or two preferred hardware vendors in order to reduce diversity and gain purchasing economies.

Corporate IS strategy, which defines corporate applications and group-wide systems, is given a relatively low emphasis in both styles. Some of the Strategic Leadership companies studied did have a limited number of group-wide systems, such as for financial reporting, general ledger, payroll, and personnel. None, however, were enthusiastic about group-wide common systems. In many cases corporate-level systems appeared to be legacies of a previous centralized strategy, and the systems were being devolved as the business units become more IT independent. IS strategy, therefore, is largely the concern of divisional and business unit IT functions (Bowman, Davis, & Wetherbe, 1987).

The IT function in the IT organization does not, however, necessarily decide and then dictate IT strategy. In both the Strategic Leadership and (to a lesser extent) the Strategic Guidance companies, a key role of the centre is to facilitate a forum of the group's IT managers. Decisions on group-wide information technology strategy are typically made by the IT managers--with the IT staff facilitating the process, researching issues, presenting options, and so on. This approach seemed to be important in order to ensure that the business unit IT managers are prepared to accept and voluntarily adhere to group-wide policies and standards. As one IT manager commented: 'Why wouldn't you adhere to a strategy or policy that you yourself were involved in creating?'

In Strategic Leadership companies, the IT function also involved senior general managers in IT strategy decision making by chairing a high-level policy forum. This provided a vehicle for: (a) promoting integration between the IT function and the business; and (b) involving senior management in IT matters to promote IT awareness and commitment. This forum may take the form of a management board for the IT function. This approach appeared to have much to recommend it, as it encouraged the board (which typically comprised senior head office and business unit general managers) to view the IT function as their resource--rather than as a remote function 'owned' by the head office. Decisions made are therefore more likely to reflect group-wide needs rather than those of the centre only (Lacity, & Hirschheim, 1993).

In Strategic Leadership companies, the centre takes a comprehensive approach to strategic control; proactively reviewing IT plans for quality of thinking, integration with business plans and conformance to group policies. The aim is both to ensure that the business units are making a professional job of IT and that they are doing it in the manner defined by the group's IM and IT strategy. In some companies the group IT director/ CIO also has a degree of influence over the business unit IT managers through the annual performance appraisal and group-wide career development programs (Lederer, Mendelow, 1986).

In Strategic Guidance companies the strategic control process is much less comprehensive - being limited primarily to challenging the quality of thinking behind business unit IT plans in a more ad hoc manner. Business unit IT plans are typically only reviewed, to ensure quality of thinking and 'reasonableness' of planned investment, as part of the IT capital investment approval process. The centre attempts to ensure that IT investment plans are well thought out and that the business units are making a professional job of IT, but is not too concerned about the details of how they go about implementation of the plans.

In both styles the centre may actively intervene to enforce strategic control. Strategic Leadership style companies in particular will restructure business unit IT functions, appoint new IT managers, and implement new IT management processes in the business units when necessary. This will often be the case following acquisition of a new company. The centre in Strategic Guidance style companies will also act to restructure business