6 signs it’s time to restructure your IT organisation

An outdated, underperforming IT function that’s mismatched with business goals needs to be overhauled before it’s too late. Here’s how to know when to shake things up.

Deciding on whether to scrap or keep existing infrastructure of any stripe isn’t easy. A complete rebuild can be disruptive, time-consuming and risky. If the initiative misses its goal, or runs over budget, the CIO’s job may be at stake.

Yet, as any IT leader knows, when technical infrastructure fails to meet enterprise needs, hampering productivity and innovation, it’s often time to rebuild from scratch. The same can be said for how IT operations, workflows and teams are structured. Knowing when it’s time for a wholesale reorg requires even more from an IT leader than knowing when the bits and bytes have worn out their shelf life.

Has your organisation’s IT structure outlasted its usefulness? To find out, check out the following danger signals.

1. Past incremental restructuring attempts have failed

Updates and improvised rearrangements can keep an aging organisational structure tottering along for a while, but the repair bucket eventually runs dry. At that point, the way work is done, including who does what and with whom, starts damaging workflows, decision-making, collaboration, customer service and other critical processes.

When reorganising any infrastructure, it’s important to understand what will be essential to retain. The same can be said for IT operations itself.

“The goal isn’t to restructure with nothing remaining from what was valuable and meaningful,” said Andrew Sinclair, a managing director in consulting firm Accenture’s technology strategy and advisory practice. “Change requires something that is stable and durable.”

Restructuring can create uncertainty and stress in an organisation and it shouldn’t be used lightly or regularly, Sinclair explained. Yet a radical change is sometimes necessary.

“Consider new ways of structuring how work is done, breaking down existing functional and organisational silos so teams can be combined with the full set of skills to be successful, while also reducing dependencies that can slow work.”

2. You’re fixing problems instead of delivering results

A department that lives in conflict typically struggles to efficiently execute strategies and tasks, said Eric Lefebvre, CTO at Sovos, a tax compliance and regulatory reporting software provider. He noted that IT organisations can usually work through almost any problem as long as the parties grow together. “But if the design or role clarity is a constant source of friction, the results will inevitably be suboptimal,” he said.

The restructuring plan’s first step should be assessing the existing environment as well as the ideal end state. “A solid understanding of the environment informs the structure and enables drilling into the next level of detail,” Lefebvre explained.

As the restructuring strategy takes shape, Lefebvre advises coordinating plans and decisions with the enterprise’s human resources leader to ensure that compliance and other important mandates will be met. “External peers in your network that have performed similar [restructuring] efforts are also a great resource for information on approaches and pitfalls to avoid,” he added.

3. There’s been a major enterprise shakeup

Whenever a significant enterprise change occurs, such as a merger, major acquisition, or radical new business direction, the IT organisation may have to be rebuilt to accommodate the new reality.

An important first step, once the decision to restructure IT has been made, is to be open and transparent with team members about the current situation, said Dena Campbell, CIO at Vaco, a global consulting firm. “Employees will want to know what it means for them and their roles,” she explained.

Campbell suggested that IT should work closely with HR to develop a comprehensive communication plan that ensures all parties fully understand what’s happening. “If you’re communicating with employees, any frustration or anxiety will be mitigated,” she said.

Establishing a realistic transition timeline is also necessary. The best way to set a timeline is to understand IT’s current position and then identify the restructuring goals, Campbell said. It’s also important to understand and factor into the plan, that productivity and efficiency will dip when there’s so much sudden change.

“Everyone will need time to adjust,” she advised. “Be realistic about setting a timeline and include time for the disruption itself, since it can take a while for the dust to settle and to get buy-in for the new plan going forward.”

4. An unhappy IT team

An obvious — and ominous — sign of org structure failure is when IT team leaders and members begin complaining about their tasks. “That’s something C-suite executives need to listen to,” saids Tom Kirkham, CEO and CISO of cybersecurity firm IronTech Security.

The CIO in particular should know how to respond to internal strife. “A company culture that’s toxic will render less productivity and subpar outcomes, which will ultimately compromise the bottom line,” Kirkham warned. “A good executive, one who practices servant leadership, knows that and how to respond to internal strife quickly and deliberately.”

As the restructuring planning begins, all stakeholders should be given the opportunity to voice their concerns and needs equally. “This is the only way to establish an IT culture that doesn’t erode from within,” Kirkham said. The restructuring should also establish priorities that contribute to the enterprise’s overall well-being, including its internal and external security.

5. Essential tasks are forever stuck in neutral

IT has fallen into a rut. Critical attributes, such as innovation, initiative and transformation are either absent or rarely seen. Decisions are made slowly, reluctantly and infrequently. Meetings may be held to discuss critical issues, but end without resolution.

Meanwhile, necessary changes remain in limbo, as previous decisions are questioned during the execution phase. “These [signs] often signal there’s confusion as to who the key stakeholders are, where authority lies, or [there’s] a mismatch between organisational structure and how work is intended to flow,” said Ola Chowning, a partner with global technology research and advisory firm ISG.

“Delays or erratic workflows may be the result of organisational confusion,” Chowning observed. She noted that confusion is usually caused by a disconnect between the organisational structure and the operating model and typically manifests over time.

“This may be due to a new way of operating, such as a move to agile or product-oriented delivery, the distribution or centralisation of major functions, or the influx and/or outflux of people,” Chowning said.

Full restructuring is a drastic move and Chowning believes that it’s a decision never to be made lightly. “Departments should make sure a reorganisation is being done for a specific reason or need and not as a knee-jerk reaction when a key leader exits, when a new CIO enters, or because it hasn’t been done in a while,” she explained.

“Reorganisation should signal to the entire department that you are expecting changes to outcomes and ways of working.”

Creating the new operating model will require a significant amount of time. “My experience has been anywhere from five to eight weeks for the complete design,” Chowning said. “Placing names in frames and selecting leaders, if that’s required, would follow and that timeline is most often dependent on the HR practices of the enterprise.”

6. IT has a lousy internal reputation

The most important sign that something needs to change is when C-suite colleagues begin harbouring a negative perception of the IT department, said Ben Grinnell, managing director at business and IT consulting firm North Highland.

“Common perception issues include when IT is viewed as a cost centre by the CFO, when IT is the last place the business turns to for help with digital innovation of its products and services and when IT has more roles that don’t work directly with the business than those that do,” he said.

To counter negative perceptions, the CIO should consider reconfiguring IT into a more flexible structure. “The organisation’s efforts should be outward facing, with the goal of changing the perception of IT,” Grinnell explained.

He advised CIOs to tap into discussions about how IT can drive revenue and increase margins through innovation and what investments will be needed to enable change.

IT is an ecosystem, Grinnell stated. “Any restructuring needs to include the entire workforce, including the employees, consultants, contractors, system integrators and outsourced elements.”

Grinnell believes that IT restructuring should never treated as just another project. “It should be viewed as an always-on transformation, not a project that will one day be finished,” he added. “That’s an unrealistic goal that sets the team up for failure.”