InformationWeek

July 31, 2000

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The Changing Face Of IT

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The end result is the reorganization of the IT department into a services organization, launched June 1. The unit includes almost 5,000 workers from the initial IT organization, as well as staffers who worked on Web functions in various business units. Sales and marketing staff also participate in the new organization, but continue to report to Michael Glenn, executive VP of market development and corporate communications. "We're putting as much muscle into E-commerce as we can," Carter says.

For business reasons, selected groups-such as overseas IT-will continue to operate separately. "It's very difficult to stay keenly in tune with Asia systems, for example," Carter says. The company has IT resources in each global region, as well as experts in language support, customs, and regulations.

Instead of a desire to encompass IT resources, some organizations feel the need to push IT processing out to the areas it most affects. For the Cincinnati Public Schools system, centralized IT was a recipe for disaster, says director of IT services Dave Hickey. The reason? About 42% of the city's 48,000 students change schools at least once each year.

In the past, IT kept track of students using a "pony express" system: People delivered information by hand to the main office from each of the city's 77 schools. By the time keypunch operators entered the data into the central database, four to six weeks had elapsed. The delay affected teacher assignments, school bus loads, and allocation of food, supplies, and services. "Some schools would have too many teachers; others wouldn't have enough. The union wouldn't move them after a certain date," Hickey says. The school system couldn't accurately document how many lunches were needed per school, which affected government subsidies for school lunches.

Hickey decided to get IT administration services closer to where they were most needed. But most of his 51 IT staff members were supporting the mainframe, doing data processing or administration. So he tapped management-service provider Integris, a division of Bull HN Information Systems Inc., to take over management of mainframe applications. Hickey whittled his central IT staff down to nine people. At the same time, he hired nine database administrators, each reporting to a different department, such as food services, finance, student information, and human resources; each department supports its own applications. As for tracking students, that's been brought closer to the source: At each school, a clerical worker inputs data such as grades, absenteeism, and school fees, which is sent over a high-speed network to the appropriate department.

Hickey says the new structure creates some challenges. For instance, while IT standards are in place throughout the school system, there's no centralized IT security program.

Decentralization can cause other problems. With a high degree of decentralization, for example, it's natural for ad hoc IT groups (sometimes called shadow or rogue IT organizations) to form-each setting up whatever standards seem most expedient for them. They know their own needs, but they don't necessarily have a companywide context for what they're doing. The problem is at least twofold: They're doing redundant work, and, worse than that, what they create may not be compatible across all departments.

Even in an organization whose goal is centralization, such ad hoc efforts are hard to control. "Most CIOs would say that shadow organizations exist," says FedEx CIO Carter. The problem is compounded when organizations turn to outside contractors for quick fixes. "Born out of the IT backlog, it's natural to say, 'bring in a few contractors,'" Carter says. "I spend a lot of personal energy to manage it."

Until the past few years, it was easy to make a distinction between IT and the rest of the business. Indeed, when IT was called the "glass house" many years ago, it was run by technicians literally segregated from the workforce, writing code and maintaining huge computers in isolation. But now IT permeates everything, and even non-technical companies are becoming technical. Consider that almost every packaged-foods manufacturer or large clothing retailer has a Web site and is looking at or is involved in business-to-business or business-to-consumer Internet initiatives. And IT professionals at all levels-once separated from customers by at least two or three layers-now work face-to-face with their colleagues in other business units and with customers.

CarsDirect.com Inc., an E-commerce company that sells cars directly to consumers, is fairly typical of the increasing overlap between business and IT. An IT operations group keeps the infrastructure running, but not everyone in it reports to IT. Several key IT professionals who work on operations report to business units instead. In a similar fashion, a few staff members from business units have moved to the IT department, taking on new responsibilities. For example, a business analyst in the marketing department at CarsDirect.com is working on an IT project with the company's affiliate, Move.com, to share customer data.