Eight Imperatives for the New IT Organization

Change has become the trademark of the business world in the 1990s. The pace of change is so frenetic that organizational theorists view change management as a critical competency — in some cases, the critical competency — for successful organizations in the future. New customer demands and technological capabilities are causing organizations to undergo transformations that involve redefining their very mission. Not surprisingly, subunits within those organizations, particularly the information technology (IT) function, are also rethinking their roles. The growing importance of information, coupled with the increased distribution of the technology to knowledgeable users, has both IT professionals and business managers reexamining the role of the IT unit. Some wonder whether there will even be a role for the IT function. This article presents our perspective on the future of the IT organization, based on three years of research on IT’s changing role.

Our conclusions are partially drawn from a study of new IT management practices in fifty firms and a comparative study of IT organizations in four countries.1 As part of the latter project, we interviewed IS executives at four large U.S. corporations and twelve European and Japanese companies. Their views on the future of IT organizations in general and, more particularly, their plans and change programs for their organizations, form the basis for our thinking. These CIOs and other IS managers with whom we have discussed the future role of IT offered diverse views of their environments. Most had unique plans for their particular units, but many common themes emerged.

We review these themes first by exploring changes in business and technology that are driving changes in the role and structure of IT units. We then define and discuss eight “imperatives” for IT organizations in responding to these changes. Finally, we suggest the responsibilities that will become core activities of the IT unit and emphasize a major factor necessary to its future success: line management’s assumption of a joint leadership role for IT.

Business Change

Not surprisingly, the CIOs we interviewed said their firms were experiencing an increasingly volatile business environment, driven by greatly intensified global competition, which has major implications for firms. There is less slack time, both in developing new products and in delivering customer orders. Customer satisfaction no longer means just prompt, courteous service; it also means designing products and services to meet individual customer needs. Equally important, costs must continuously go down, not up.

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References

1. See J.W. Ross, C.M. Beath, and D.L. Goodhue, “Reinventing the IS Organization: Evolution and Revolution in IT Management Practices” (Cambridge, Massachusetts: MIT Sloan School of Management, CISR working paper 266, February 1994); and

J.W. Ross, C.M. Beath, and D.L. Goodhue, “Develop Long-Term Competitiveness through IT Assets,” Sloan Management Review, volume 38, Fall 1996, pp. 31–42.

The comparative study, a joint research project between the MIT Center for Information Systems Research (CISR) and the Centre for Research in Information Management (CRIM) at London Business School, led by Michael Earl, examines similarities and differences in IT management in the United States, the United Kingdom, France, and Japan.

2. C. Handy, The Age of Unreason (Boston: Harvard Business School Press, 1990).

3. L.M. Applegate and N.A. Wishart, “Frito-Lay, Inc.: A Strategic Transition (C)” (Boston: Harvard Business School, Case 190-071, 1989); and

R. Simons, “Strategic Orientation and Top Management Attention to Control Systems,” Strategic Management Journal, volume 12, January 1991, pp. 49–62.

4. H.W. Deutsch and J.C. McCarthy, “The New Customer Connection,” Computing Strategy Report (Forrester Research), September 1994.

5. J.E. Short and N. Venkatraman, “Baxter Healthcare Corporation: ASAP Express” (Boston: Harvard Business School, Case 188-080, 1988).

6. “The Computer Industry,” The Economist, 27 February 1993, pp.3–18.

7. Ross, Beath, and Goodhue (1996).

8. M.J. Earl and D.F. Feeny, “Is Your CIO Adding Value?,” Sloan Management Review, volume 35, Spring 1994, pp. 11–20.

9. P. Weill, M. Broadbent, and D. St. Clair, “Management by Maxim: The Formation of Information Technology Infrastructures” (Cambridge, Massachusetts: MIT Sloan School of Management, CISR working paper 276, December 1994).

10. M.J. Earl, “Limits to IT Outsourcing,” Sloan Management Review, volume 37, Spring 1996, pp. 26–32.

11. J.C. Henderson, “Plugging into Strategic Partnerships: The Critical IS Connection,” Sloan Management Review, volume 31, Spring 1990, pp. 7–18.

12. Handy (1990).

13. S.L. Hodgkinson, “The Role of the Corporate IT Function in the Federal IT Organization,” in M.J. Earl, ed., Information Management: The Organizational Dimension (Oxford: Oxford University Press, 1996), chapter 12.

14. M.J. Earl, B.R. Edwards, and D.F. Feeny, “Configuring the IS Function in Complex Organizations,” in Earl (1996), chapter 10.

15. J.F. Rockart, “The Line Takes the Leadership — IS Management in a Wired Society,” Sloan Management Review, volume 24, Summer 1988, pp. 57–64; and

A.C. Boynton, G.C. Jacobs, and R.W. Zmud, “Whose Responsibility Is IT Management?,” Sloan Management Review, volume 33, Summer 1992, pp. 32–38.

16. H.J. Leavitt, “Applied Organizational Change in Industry,” Handbook of Organizations (Chicago: Rand McNally, 1965), chapter 27.

17. J.F. Rockart and M.S. Scott Morton, “Implications of Changes in Information Technology for Corporate Strategy,” Interfaces, volume 14, January–February 1984, pp. 84–85.

Acknowledgments

The authors gratefully acknowledge the support of the MIT Center for Information Systems Research, the IBM Institute for Electronic Government, the Centre for Research in Information Management at London Business School, and also Judith Quillard of MIT/CISR for her valuable suggestions.