by Lauren Brousell

IT Department Reorgs Are on the Horizon

Feb 26, 20132 mins
IT Governance

An IDG Enterprise study finds that most IT departments are centralized, but the federated model is gaining momentum as CIOs reorient their staffs to focus on business needs

Given the opportunity, more than one-fourth (27 percent) of IT and business leaders would rebuild their IT departments from scratch, according to an IDG Enterprise survey of 696 senior IT and business executives.

That approach may be more radical than most, but the “Future State of the IT Organization” study shows that IT departments are headed for profound changes as CIOs try to refocus their staffs on business results such as revenue, customer service and product innovation.

Today, 65 percent of IT organizations are centralized, giving CIOs control of the IT budget and technology assets. The remainder are federated (27 percent), where some IT decisions and assets are distributed among business units, or totally decentralized (7 percent).

But that mix may be changing. The survey finds that CIOs who are considering IT reorganizations to meet future business requirements tend to favor a federated approach that puts some IT staffers in the business units.

CIO Karla Viglasky set up a federated model for her IT department at ITT after the manufacturing company split into three parts in 2011. “On the business side, they are running and gunning, and you have to be supportive and flexible,” she says. “With the federated model, we have a balance of the two [centralization and decentralization]. That balance is where the magic is.”

Left with a smaller staff after the divestiture, Viglasky needs IT professionals who fit the federated model. “I need people that are more business-savvy and will find solutions in the middle,” meaning they satisfy business requirements while maintaining security, she says.

IT leaders are rethinking other aspects of the organizational chart as well. Today, 38 percent of IT departments place the staff under VPs for technology areas (such as applications and infrastructure), while 27 percent are organized by business function (such as HR) and 18 percent are organized by business processes (such as supply chain). But the study says CIOs tend to consider the process-focused staffing model a better fit for the future.

Lauren Brousell is a staff writer for CIO magazine. Follow everything from on Twitter @CIOonline, Facebook, Google + and LinkedIn.