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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Technology goes public changing the IT organization

by Mark P. McDonald  |  May 28, 2010  |  3 Comments

Technology has gone public. Changes in the technology stack over the last forty years have changed every aspect of IT, including the IT organization.  The figure below provides a summary of the structures within the technology stack.  The model is a little simplistic, but it does illustrate some of the deep structural changes going on in technology.

Slide1

Designing an organization represents a balance between issues of value, capacity, capability, risk and personnel resources.  Changing IT fundamentals changes the balance between these factors and therefore the design of the IT organization.

Those fundamentals have changed as the various ‘structures’ within technology have gone public.  The figure below highlights the changes as successive structures have evolved from private operations to publically available services.

Slide1

The beginning – the lab

In the beginning, all IT was private.  Because it was private, meaning there were no services available in the marketplace and you had to build technology on your own.  The heavy experimentation and home built construction burden kept IT organizations small at the beginning.  In the early years IT was more of a scientific lab organization than an enabling functional organization.

Slide3

This changed, as the substructure became a public service enabling technology to move from the lab to corporate IT.

Corporate IT – The Pyramid

As the substructure became public, the modern corporate became possible.  The IT organization followed.  The corporate IT pyramid remains the dominant IT organizational construct.  Based on the premise that IT has to build, integrate, own and operate corporate technology.  The central challenge facing IT organizations in this environment was how to concentrate scarce technical skills and organize them in a way that delivered and operated IT solutions at scale.

Slide4Corporate IT organizations mimicked other enabling functions in the enterprise.  Specialization skills led to creating technical silos managed by a leadership hierarchy and support skills such as the PMO.  Work flowed between these specialty groups as each needed to have a deep understanding of their particular ‘private’ technology.

Public Infrastructure – IS Lite

The introduction of IT Outsourcing services (ITO) and recent extension into managed services has challenged the validity of hierarchical corporate IT.  Introduced in 1999, Gartner’s IS Lite model, described an organizational response to IT infrastructure moving to publically available services.

IS Lite is based on defining what remains in a ‘retained IT’ organization following significant use of outsourcing.  Taking a design by subtraction approach, IS Lite identified the core competencies that need to remain within the enterprise to support not only managing IT service levels, but also IT applications and data which remained in private hands.

Slide5

IS Lite is a dominate model in organizations that are heavily outsourced and Business Unit IT organizations that ‘source’ their infrastructure through a corporate parent.  However, the scale benefits of public infrastructure both in terms of reliability, cost savings and capital avoidance has led to future technical innovation that is taking the heart of IT public and requiring another evolution of the IT organization.

Public Structure—Lean IT

Open source, consumerized IT, cloud infrastructure and software as a service (SaaS) technologies are taking IT structure and applications public.  Applications, which were once the customized or custom domain of the enterprise, are becoming ‘apps’ created and managed outside of corporate IT.

The public shift calls the very nature of business IT into question.  Consumers operate a rich set of operations in a public environment without retaining a specialized personal support group.  If you have every provided ‘tech support’ to your friends, neighbors or family you know the limitations of that statement.

IT’s future in an environment of public structure, infrastructure and substructure has to be based on more than a process of subtraction applied to create IS Lite.  Applying Lean Principles to IT organization design is one approach.  Lean design principles concentrate on capabilities that create value and cutting away ‘waste’ or muda that adds no value.

Slide6A lean IT organization concentrates its resources around enterprise context, the one part of the technology stack that must remain private.  In doing so, a lean organization retains many of the IT leadership functions in order to manage technology and its impact on enterprise strategy and financials.  However, much of the bottom pyramid is replaced with sourcing relationships – leading to a diamond or arrow shaped group that has fewer people, but deeper skills within each person.

The implications of a lean IT organization are more than we can cover in a few sentences so that will be handled in a subsequent post.

Conclusion

The shape of technology dictates the shape of the IT organization.  While the majority of IT shops are constructed around corporate pyramids, the shape of IT will change as new technologies come on line that enhance the price, performance and capability of public infrastructure and structure.

Does this mean that the future of IT is diminishing, collapsing into an ever-smaller set of skills?  No I do not think so.  I believe that IT leaders who recognize the realities of IT going public also recognize the opportunity to create new sources of strategic value – the focus of the next post in this series.

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