The Role of the Corporate IT Function in the Federal IT Organization
STEPHEN L. HODGKINSON
The organization, or reorganization, of IT activities is a perennial item on the agendas of the CIOs of large companies as they seek to ensure that their IT functions are aligned with an ever-changing business and technology environment. Consider these examples:
--The furniture group Silentnight created a new IT organization in 1990. Previously, each of the group's subsidiaries had an autonomous IT function, with no standardization or co-ordination of effort across the group. Management recognized that this approach failed to realize economies of scale and synergies between subsidiaries that were fundamentally quite similar--and led to much re-invention of the wheel and wasted effort. A central IT management group was created, tasked with formulating group-wide IT policy, standardization of IT purchasing, and the development of common core business systems.
-- W. H. Smith, the UK based international retail group, 'tore up its centralized IT strategy and opted for a federal structure' in 1989. Responsibility for systems development was devolved from a central management services unit to the strategic business units. The central IT services unit was substantially downsized and refocused on strategic co-ordination rather than service delivery.
--The retail giant Storehouse created a centralized IT organization in 1988, only to reorganize in 1990 by devolving all IT resources to its divisional managements and closing down the corporate IT unit. The group chief executive stated that: 'Unambiguous profit accountability requires that the operating companies take greater responsibility for the support resources which underpin their businesses... We have therefore decentralized information systems and technology. This reduces head office overheads and allows the centre to concentrate on strategic issues, financial control, and performance monitoring.'