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Sun 13 Apr 2008 04:00 AM

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Top five CIO mistakes

IT decision makers need to make effective organisational decisions, or they can render the technology management process ineffective and counter-productive, says Forrester's Todd McGregor.

IT decision makers need to make effective organisational decisions, or they can render the technology management process ineffective and counter-productive, says Forrester's Todd McGregor.

CIOs frequently change the structure of the IT organisation to reduce costs, improve services, or increase responsiveness. Getting the organisation design right is essential; the wrong design can degrade business relationships and damage culture.

Here are the top five mistakes in the designs of IT shops, from highest to lowest impact:

1. Conflicting culture and structure. When conflict exists between organisational design and informal behavioural norms, the design will fail.

Example: The global CIO of a 200-person IT shop set up a management committee to prioritise IT investments. However, before the creation of the management committee, investment decisions rested with the CEO - who made unilateral decisions - and the leaders of individual business units who made decisions for their units independently. After two meetings, business leaders lost interest, and the CIO disbanded the group.

2. A management style that conflicts with IT goals. The choice of a bottom-up (frontline employees make decisions) or top-down (senior management makes decisions) decision-making style must match the goals of the organisation.

Example: A bank created a small vendor management (VM) function to quickly reduce vendor costs. The business chose a facilitative style where VM provided information on vendors and relied on other groups to manage them. While some vendor relationships improved, the plan did not realise cost savings; the style of VM chosen had too little oversight and control to make significant changes quickly.

3. Metrics that don't support the direction of IT. You get what you measure and reward. Measurements that are out of sync with the goals and principles of the organisation will drive the wrong behaviours.

Example: A financial services firm asked for leadership but measured tactics on 15 to 20 detailed tactical elements, causing the IT architects to focus primarily on checking off items on this list and neglect the company's need for technology leadership.

By using metrics that conflicted with its goals, the organisation lost an opportunity to lead the movement to new technology and confirmed the widespread view within the organisation that architects were merely techies without business savvy.

4. Weakened strategic functions. Weak architecture, planning, vendor management, and other non-operational functions lack the traditional levers of power: large budgets, management of key systems and services, and ownership of customer relationships.

CIOs weaken these groups by dividing and distributing them among multiple groups; by having them report low in the organisation; by preventing their ownership of or involvement in key processes, such as project initiation; and by insulating them from real-world responsibilities.

Example: An airline distributed architects to applications, infrastructure and other IT functions. Dispersing them among multiple development and infrastructure groups forced them into daily fire-fighting that prevented them from developing standards and processes that had long-term value.

5. Overly fragmented functional groups. Fragmentation occurs when organisations slice functional groups, such as applications development, into small pieces where everyone must do everything, including maintenance, development and testing. This leads to a lack of specialisation that reduces efficiency.

Example: A media company divided its 150-person applications organisation into 11 groups organised by a mysterious combination of customers, products, geography, and technology. With so many people using such a wide variety of technologies and tools nothing was done well, particularly in areas of testing and reuse.

Todd McGregor is managing director of Forrester Middle East.

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