IT Department Structure: 7 Important Things Business Owners Should Know

If you’re trying to decide how to structure your IT department you should know that there might be more options than you think. For example, for many organizations, the IT function isn’t even inside their company. So much so that 66.5 billion dollars is invested in IT outsourcing worldwide.

For an IT department to perform well, it needs the right structure. Read on to learn 7 things you should know about your IT department structure.

1. Why Are Functional Structures Such a Common IT Department Structure?

A familiar form of organizational structure is a functional structure. This is where organizations separate marketing, sales, finance, operations, and human resources into departments. The number and size of departments vary from organization to organization but nevertheless this structure is very common.

Applied to an IT department, a functional organization might involve creating sub-departments. This sub-departments reflect the sub-functions within IT.

Some IT functions include application development, systems analysis, application management, and IT procurement. IT security, IT support, and network administration are some more examples.

The reason that this form of organizational structure is so common is that it allows for specialization within the functions. It’s great for established and stable organizations where control, efficiency, and economy are key. That’s why they are so common.

It’s important to know that this structure might be very common but it doesn’t mean it’s right for every organization or that it’s right at all times.

2. Don’t Rule Out Outsourcing

When you think about the organizational structure for your IT department you might try sketching organizational diagrams. Those boxes and lines can help you visualize the options. Even though this is a helpful way of conceptualizing your IT department structure it has a limitation.

When drawing an organizational structure, it’s likely that you will assume the whole structure is inside your company. That could be a conceptual mistake. The organizational structure might be all or partly outside the company.

Outsourcing is a very viable option for many companies. Outsourced IT support, for example, might complement the rest of your in-house IT department. There are some great reasons why outsourcing could be right for you.

Outsourcing can be cheaper than in-house especially if the need is only temporary. It enables you to access talent that is hard to reach and do it quickly. If you need to scale up your operation quickly, consider including outsourced IT as part of your organizational structure.

3. Sharing is Nice

As a child, you may have been taught that sharing is nice. In the context of your IT department structure, sharing can be nice too.

There are some activities in an IT department that are used by most functions in the company. IT hardware support is an example. Most functions need support for PC’s, printers, and telephony.

The way each function uses these resources may be different. Customizing the IT hardware support to the needs of each function is difficult. There is an organizational structure that does this very effectively.

A shared service structure with business partners in each function does this. A central share service can develop expertise, maintain the human resource cost-effectively, allocate resources efficiently and retain talent. Business partners embedded in each function help translate the user’s needs into IT solutions.

This organizational structure can overcome some of the common accusations made against IT departments. They don’t understand the users and they are unintelligible to users.

Embedded business partners can talk the language of users. They then translate this into technical language and IT solutions for the IT function. Business partners can then help users implement the solutions better because they are close to the user and understand the business application and context.

In this sense sharing is more than nice. Share services with business partners are effective business-oriented service delivery.

4. Follow the Customer

An alternative organizational structure to functional structure is one that reflects an often-stated business priority. Many organizations say they are customer orientated but then fail to follow up on the implications of that statement. An organization that is truly orientated around its customers is not likely to be organized on a functional basis.

Let’s say your organization has three distinct geographical customer markets. These customer markets might be the USA, Asia-Pacific, and Europe and the Middle East. These markets operate very differently, have completely different time zones and may even use different technologies.

Why would a customer orientated organization have a central IT department to support operations in these three markets? A customer-centric approach would be to have IT functions in each market, or at least dedicated to each market. A dedicated help desk for each market, for example, could overcome language, time-difference, and technology challenges more effectively than a universal service.

If your organizational culture and values are all about the customer, consider following that through to organizational design for the IT department.

5. There’s More to Matrix

The Matrix movie was one of the most impressive and yet conceptually difficult of its time. The same is true of the organizational design option of the same name. A matrix structure famously ignores traditional ideas of hierarchy but can it provide a realistic option for IT structures.

The matrix structure allows more than one reporting line to exist simultaneously. This means that an individual in the organization can have a functional line-management chain of command as well as another line responsibility. That additional accountability could be to a project, a product category or even to a market.

The advantage of this approach is that it can be very flexible and speed up decision making. It does this by providing better communication and information sharing.

The disadvantage is complexity. Rather than speed decision making it can slow decision making down as confusion about authority inhibits efficiency. Power play and rivalry can undermine good intentions.

6. Flatten IT

In straightened times organizations look for ways of reducing costs. A simple solution is to de-layer organizational structures. This appeals to those who need to find economies and also plays to an anti-bureaucratic sensibility that exists in many companies.

Taking layers out of the traditional IT department pyramid has some advantages. Management and supervision introduce an overhead that may be self-perpetuating. Take it away and people and teams often find a way to self-manage.

When people are encouraged to take responsibility for their own performance that can surprise you. Less supervision can mean people feel a greater sense of ownership. That can be more motivating and engaging.

A flatter organization does put greater pressure on the remaining leaders to be better leaders. They have to be clear communicators, coach people and be transformative. They have to be less about command and control and less transactional too.

7. There Is No One Answer

The truth is, if you are looking for the silver bullet for IT department structural design, there isn’t one. It depends on the situation. Take something from all of the options and you might get nearer to what’s right for you.

Do Something To Improve Your IT Structure

The IT department you have today is probably the result of many small decisions made over time. These are rarely strategic decisions. Perhaps it’s time to think of your IT department structure, strategically.

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