Mark McDonald

A member of the Gartner Blog Network

Mark P. McDonald
GVP EXP
8 years at Gartner
24 years IT industry

Mark McDonald, Ph.D., is a former group vice president and head of research in Gartner Executive Programs. He is the co-author of The Social Organization with Anthony Bradley. Read Full Bio

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#2 IT is a hybrid organization — Twelve things every business leader needs to know about IT

by Mark P. McDonald  |  March 24, 2009  |  6 Comments

“If only the business understood IT, then the company would get move value out of IT.”  This statement is a common belief among IT professionals.  Understanding begins with the basics, framed in a language that is acceptable to the audience rather than the teacher.  Talking about IT using the language of organization, its role, what it does, position, etc provides a starting point for teaching the business about IT.  Using this staring point here are a twelve things that every business leader needs to know about IT. 

#1 – IT is horizontal

#2 – IT is a hybrid organization – this post

#3 – IT is part of a capability – next post

2. IT is a hybrid organization

A hybrid inherits the characteristics of its parents, often through a process of cross breeding.  IT is a hybrid organization as it has enterprise wide responsibilities like other corporate functions such as HR and Legal.  IT resources are shared across the enterprise, but they do not do the same type of work (establishing and administering policies) as these other groups.

IT is an operating unit, unlike HR, Legal or Finance, which concentrate on establishing and administering policies.  IT does things, they deliver services, they have operational responsibilities that if not executed well will harm the business.

At the same time, IT contains processes related to transformation, development, support and operations.  This means that IT not only delivers current operational services, but also delivers the new solutions and innovation required for your future.  Think about it this way, the average business unit is able to allocate about 3-5% of its budget to future transformation.  This is in contrast to the average of about 30% IT organizations have to build solutions for the future.

Recognize that your business will continue to operate if temporarily loses its HR or Finance capabilities.  The enterprise will not operate if it loses IT operations.  Don’t believe me, then how are you reading these words?  You are using information technology.

So what?

As a hybrid organization, IT can take on things that other organizations cannot.  Most often this involves working on initiatives and changes that cross business unit or operational lines.  Recognize that in these circumstances IT is working ‘without a net’ and that sponsorship needs to come from the top where the business units and operations meet.  Otherwise, IT is in the position of advocating for the enterprise and the performance of the whole which is an uphill battle against business unit leaders who are responsible for the performance of the pieces.

IT as an enterprise wide operating unit has the experience housing scarce skills, such as business process improvement as well as incubating centers of excellence (COE’s) for new ideas.  The hybrid organization benefits the enterprise in two ways.  First these resources are in a position where they can be readily shared across operating groups.  Second, these resources are close enough to the technology to be better able to effect changes in systems that often accompany improvement projects.

Finally, as a hybrid organization, the IT unit can drive changes and improvements that streamline operating costs well in excess of the specific IT budget.  This often happens where the IT budget is small, but IT solutions create leverage saving the organization 10 – 30X in expenses versus the IT budget.

6 Comments »

Category: 12 things business should know about IT CIO Leadership     Tags: , , ,

6 responses so far ↓

  • 1 Google isn’t run by monkeys, neither should your IT department | Blogging Idol   March 24, 2009 at 9:32 pm

    [...]  Mark McDonald from Gartner recently is writing an interesting series, and in the most recent article refers to how IT often plays a significant role in assisting to streamline operating costs, [...]

  • 2 liu   April 1, 2009 at 1:35 am

    thanks for your reply yesterday.May you summarize your viewpoint with one or two statements,why is IT a hybrid organization.
    Is it the following is the key reasons?
    ” IT not only delivers current operational services, but also delivers the new solutions and innovation required for your future”

  • 3 Mark McDonald   April 1, 2009 at 7:58 am

    Liu

    Yes its a hybrid because it has operational responsibility and transformation responsibility.

    You can also think of it as a hybrid because it has corproate oversight responsibility for technology (like finance) but it have operational responsibility (unlike finance)

    But the earlier point is the most accurate

  • 4 Dr Stanley Mpofu   March 29, 2011 at 11:12 pm

    Dear Mark
    Please explain to me why IT cannot be a shared service

  • 5 Mark P. McDonald   March 30, 2011 at 5:05 am

    Dear Dr. Mpofu

    It can be a shared service and often is even when its not formally called a shared service. This is the case when IT is centralized and the business has multiple business units. The objective of the post was to point out that IT is a hybrid organization from the perspective that it has a portfolio of responsibilities that are normally not found together in the same organizational unit.

    For example, business units primarily center on operations and execution. Strategy, transformation, buying other companies etc is handled in a separate group. In IT they have the responsibility for both operations and transformation — not just of IT but often a significant part of the way the organization works.

    Those responsibilities can be handled via a shared service structure or other structures.

    Thanks for your question.

  • 6 12 Things every business needs to know about IT.   July 11, 2011 at 6:16 am

    [...] #2 – IT is a hybrid organization. This item, compounding with the first, makes IT a mystery to many executives.  The hybrid nature of IT is its role in both current operations and future transformation projects.  Effective enterprises recognize both roles and manage these roles differently.  Other organizations are frustrated by these roles either seesawing between cycles of development and operations, or by separating the two functions into entirely different organizations. [...]