Modular it

Modular IT Organization in Utah State Government
Phillip J. Windley, Ph.D. Chief Information Officer Office of the Governor State of Utah There is substantial debate inside IT circles about what model for organizing IT works best: centralized or decentralized. I recently wrote about the need for the state to build a world class IT infrastructure. As part of that document, I wrote that I did notthink that the State could afford to build more than one world-class IT infrastructure. Many interpreted this to mean that I am in favor of a more centralized IT organization structure. In the past, centralized IT was the norm because of the cost of large corporate mainframes. As personal computers came into their own, computing was thought to be more decentralized. My vision of IT organization isneither fully centralized nor totally decentralized. Instead it analyzes core IT activities and fits them to the most appropriate governance structures. This paper will describe what I believe we need to work toward: a modular IT organization for Utah State Government. In my opinion, this approach is the one most likely to achieve success in providing IT to the state that is both cost effectiveand world class.

IT Governance Models
There are several ways that core IT functions can be organized.1 The following discussion describes some of the more popular models. Centralized. In the centralized model, topdown responsibility for solutions delivery, conceptualizing, developing and implementing IT solutions for all parts of the business is controlled by some central authority. Acentralized model is economical from both a skill and an overhead standpoint, but does little to build client relationships, foster business knowledge in IT staff, or further align IT with business needs since customizing the solution to fit the business can be difficult.
See “Designing Adaptive Organizations” by Ritu Agarwal and V. Sambamurthy, CIO Insight, December 2001 (No. 08) for a more generaldiscussion of modular organization in IT.  Copyright 2002, Phillip J. Windley. All rights reserved. Reproduction of all or part of this work is permitted for educational or research use provided that this copyright notice is included in any copy. Unconditional use is granted to the State of Utah.
1

Centralized, with CRM Role. In this model, the conceptualization and delivery of IT services isstill carried out by a central authority, but that authority is augmented with the addition of customer relationship managers—people who deal directly with customers on behalf of the centralized authority to mitigate some of the disadvantages of the central model. This model does much better than the pure centralized model because it aligns IT with business needs and builds client relationships.Nevertheless, it does require the additional overhead of staffing the CRM function and also requires that effective coordination to occur between the CRM staff and solution delivery teams. A Federated Model. In the federated model, a statewide IT unit such as the CIO's office has primary responsibility for architecture, common infrastructure and services, and standards decisions, while each agency ITdepartment has primary responsibility for application resource decisions. Agency IT managers report into the agency director as well as the central IT organization. The federated model gives good balance between enterprise and local innovation. Also, it is quite effective at aligning IT with the needs of the business. The disadvantages of the federated model are the complexity of coordinatingamong so many players, the problem of dual reporting relationships, and, most importantly, the high administrative and staff costs of supporting multiple IT organizations. Decentralized. The decentralized model is the loosest of the organizational choices. In the decentralized model, solutions delivery is aligned with the agency line of business and IT managers report to the agency director. When...