In his latest article, professor of IT and decision sciences at University of North Texas, Tony Gerth, explains the platform organization, and what to consider before you take the leap.
For as long as there have been computers, there have been different approaches for how to organize IT resources. One model that has been around since the dawn of corporate IT has kept team members housed in their own functional organization. Design structures within this paradigm range from centralized to federated and decentralized.
Many consultants and academics have suggested splitting supply from demand. Under the Professional Services Model (PSF), IT considers itself as a services firm inside the organization, providing services to the business, or “running IT like a business.” Then there’s the philosophy of bi-modal IT, which manages the technology that requires predictability and reliability differently than that which emphasizes innovation and agility. All of these structures have been implemented and modified to be “partnership” structures that maintain a functional silo between IT and “the business”.
Why Platform Structures Are the New New Thing
The newest organizational structure trend is the platform-based organization. A platform is a logical cluster of processes and associated technologies that delivers a specific business goal. This has become relevant for a couple of reasons. One is that this structure has been successful for years with software, hardware and infrastructure companies. The other reason is that many organizations today are undergoing a digital transformation that makes them more technology-centric than ever before.
This transformation has challenged the first principle that IT resources must be managed in their own functional unit. Regardless of industry, many businesses are becoming more like technology companies. A platform structure more deeply embeds IT capabilities with the business functions rather than simply employing a “partnership” model of interaction.
CIOs should consider three important questions before jumping into the platform-based organization.
1. How digital are you?
How digital are you, really? This is a critical question. Many businesses today claim that they are technology companies rather than financial services, manufacturing, retailing, distribution or other types of businesses. But at most firms this is, at best, aspirational rather than a current reality.
Most organizations have both digital and operational technologies. Digital solutions are often customer or employee focused. These solutions require modular technologies and are deployed quickly with Agile/Scrum methodologies. These solutions typically are the definition of a platform.
Operational technologies are best exemplified by ERP systems. These systems are the heartbeat of the organization, capturing business transactions and providing integration across processes. They also provide much of the data required for advanced analytics. ERP systems can be managed as platforms because Finance, Supply Chain, Customer Service have unique solution characteristics and needs. However, many organizations still struggle with their ERP backbones, experiencing a lack of data governance or standard processes, and poor solution design that hobbles execution. If you don’t clean up your ERP backbone, digital will continue to be a challenging aspiration. So, consider what your digital landscape and your roadmap really look like before reorganizing the IT function.
By Tony Gerth
2. Is executive leadership on board?
A platform organization requires that information technology is viewed as a strategic capability. How can you tell if this is the case? You can tell how an organization views IT by the words it uses. If the nomenclature is always about IT spending, then you probably have a cost-driven perspective. Another sign that IT may not be fully considered as strategic is when the CIO reports to the CFO. Organizations that view IT as another cost to control will not easily adopt a platform-based organizational structure. In fact, implementing one would be nearly impossible! When you hear about IT investment, and the CIO reports to the CEO, the organization has a more strategic view of information technology and the competitive advantages it provides.
In order to successfully implement a platform-based organization, you need both executive alignment and commitment. Alignment on any significant organizational change is critical – and platform-based structures introduce a lot of change! Commitment is important because, in a platform-based structure, the platform leader is often a non-IT executive. Executive leadership must be committed to a structure that embeds information technology capabilities in all parts of the organization and introduces accountability that does not yet exist.
Platform organizations require more business leadership in the governance process as well. Setting platform strategy in collaboration with architects and product managers, being more involved in enhancements and fixes, as well as managing technical talent are just some tiers of governance that are required. All this needs executive leadership that is aligned and committed. The CIO cannot drive this initiative alone.
3. Is the culture ready?
In addition to a strategic view of IT and leadership commitment, cultural readiness is important. A platform-based organization structure changes a lot for the organization, both inside of IT and out.
Will teams, especially IT teams, accept a different orientation? Will they be willing to work as part of a platform team rather than a technical or as a functional expert? Platform-based organizations do still need some centralized, cross-platform services like architecture, standards, resource allocation and security. Opportunities as a cross-platform expert exist, but they are fewer in number compared to how many people will be reconfigured into platform teams. Managing platform performance usually means that the platform team is evaluated by new managers using new metrics.
There are “running” cultures and “walking” cultures when it comes to how quickly people adopt change. Ask yourself and your colleagues, “When it comes to large scale change, are we a running culture or more of a walking culture?”
Getting Started as a Platform Organization
Many CIOs are considering moving to platform and away from the partnership model of separate, but equal functions. Organizing by platforms is a way of delivering a business objective by bringing together IT people working on development and maintenance with corresponding people from the business.
If you are considering a platform organization, there are a few things you can do right now. First, perform a fitness assessment of your digital footprint and roadmap. How embedded is technology currently in the business and what does the future look like? Can you identify 20-30 platforms in the organization that would be managed? Second, assess the digital savvy and strategic view of executive leadership. If the roadmap for the future in the first step is technology heavy, then the executive team is probably already looking at IT strategically. Third, assess the culture. How will be people adapt to this change? What will be needed to get them ready? Don’t underestimate the size of this effort.
Like any significant change program, it is wise to run a pilot platform team for several months to work out the bugs in your implementation approach. Learn from the pilot and, if successful, develop a one- to three-year plan to move the organization into platform teams. Don’t forget there still needs to be expertise that cuts across platforms in data, architecture, portfolio management and security.
Can IT organizations be successful without adopting a platform model? For a while, the answer is yes. However, as organizations embed more technology into their operating model, the platform structure will emerge as the most effective way to organize technology capabilities. Are you ready?