The Ideal Structure for an IT Department in a Growing Business

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The Ideal IT Department Structure to Facilitate Business Growth

The modern ecosystem of global SMEs, as well as larger enterprises, is one that heavily relies on its Information Technology (IT) Infrastructure in order to increase internal operations and optimize corporate products and services. Businesses of every industry typically have six basic, internal, functional operations:

  • Production (the creation or procurement of products and/or services)
  • Operations (the supporting activities that efficiently maintain an enterprise’s processes)
  • Finance (management and data-recording of the financial resources)
  • Administration (implementation and evaluation of the business’s plans/operations)
  • Marketing/sales (effectively generating qualified leads and converting them into returning customers)
  • Business coordination (integrating and coordinating the other critical business operations to ensure smooth business processes).

IT systems and services can be leveraged in order to greatly increase all of the core business functions, such that an enterprise’s efficiency, communications, and productivity can be optimized using a variety of IT systems, all of which can increase both the bottom and top lines of the business. It is crucial, however, that an IT department be scalable to a company’s current growth, and to its projected/future growth, thus allowing the company to grow efficiently.

An enterprise’s IT infrastructure is usually composed of its Hardware systems, Software systems, Enterprise systems, Network systems, and Database systems. In order for these systems to be leveraged and efficiently utilized, board members and company executives must strategically plan, agree on, and organize the IT department accordingly, including setting the overall organization model, indicating all low and high-level functions, detailing a reporting and managerial chain-of-command, creating a pertinent and practical management model, aligning the departments with the goals of the business, and ensuring that the defined structure continues to meet the organization’s growing needs during the enterprise’s projected growth.

There is a great deal of strategic planning that must be undertaken in order to efficiently define the ideal structure of any given company’s IT department. As with any company department, the ideal structure of the IT department should be one that facilitates company growth, increases profits, and optimizes internal operations. In order for such an ideal structure to be realized, company executives should determine the aspects associated with the utilization of the IT infrastructure, including:

  • IT departmental resource allocation
  • The strategic utilization of IT in order to optimize internal operations and increase profits
  • The skillsets required in the IT department
  • Managerial and personnel roles, along with departmental teams (e.g. VP of IT, CIO, CTO, R&D, IT security)
  • Required IT systems of the IT infrastructure
  • The critical problems that the IT department is envisioned to solve – currently and as the company grows – and the inherent value of the IT infrastructure
  • The expectations of the stakeholders/investors, along with the agreed-upon long-term goals

Additionally, an overall IT strategic plan should be crafted as a precursor to the organizational/structural blueprint of the IT department in order to ensure that all aspects of the IT department align with the company’s goals and overall business model. An IT strategic plan also allows management to strategically leverage IT systems in order to keep pace in an ever-changing, global technological environment.

The planning of a company’s IT departmental structure must also take into account the differing organizational models associated with a business organization’s departments, which includes a matrix organizational model (project and functional-based), functional organizational model (departments based on fulfilling distinct processes that are associated with a specified area of expertise), product organizational structure (departments defined by a specific product-line), customer organizational structure (structure based on customer buyer-personas), geographic organizational structure (regional-based), etc

Typically, an IT department will be structured according to the functional model, or the matrix organization model, both of which focus on distinct processes and projects, and both of which have a clear management/reporting model (i.e. a chain-of-command).

The ideal structure of an IT department in a growing business is entirely dependent on the industry and goals of the enterprise. Additionally, there are a number of best practices that any company should follow when strategically planning the structure of the company’s IT department. One very critical resource that is often utilized by executives to define the structure – and optimal operations/services – of a company’s IT department is the Information Technology Infrastructure Library (ITIL).

The ITIL is a comprehensive framework detailing how an IT department can optimize its services and personnel-communications, along with helping to establish best practices for the effective management of IT operations that ultimately have the potential to better customer experiences and increase the bottom line. Additionally, the ITIL framework is often used to help executives understand the different roles of IT sub-departments, and how different teams can interact optimally in order to ultimately increase corporate productivity. In conjunction with an IT strategic plan, the ITIL framework offers valuable insights that can help strategic planners craft the ideal structure for a company’s IT department.

Understand That Your IT Department Structure Will Adapt and Evolve

One of the most crucial aspects of any department in an enterprise is effective communication – both within a department and interdepartmentally. More effective interdepartmental – and intradepartmental – communications help establish more effective workflows and better cooperation between silos and personnel, which helps to ensure that projects and workflows/operations are carried out more effectively–all of which ultimately increases corporate productivity.

The size of an organization, along with the management model and the structure of its departments, plays a crucial role in how effective communications within the company will be. Thus, the strategic plan associated with defining the structure of any given department in an enterprise – including the IT department – must take into account the growth and natural changes associated with a scalable IT infrastructure within an ever-changing enterprise.

Businesses do not operate as static entities, but operate as dynamic organizations that must have flexible strategic plans and strategies that are meant to scale with the changing needs of the organization. Additionally, the business model, products/services, departments, demographics, IT systems/technology, etc. may all change over time as the business grows, along with a presumed increase in the number of personnel within the organization over time. Thus, both an IT strategic plan, and the blueprint of the departmental structures, must remain flexible and should include proposed tweaks to the blueprint due to projected growth rates in order to allow the IT department (and all departments within the enterprise) to continue to meet the goals of the organization.

Occasionally it is important for executives to define new sub-departments or teams within the overarching IT department in order to solve new issues that may arise due to an enterprise growing beyond what the previous structure can support. These new teams will need resources to be allocated adequately within the new structure of the IT department to ensure that the teams within the department are able to continue working effectively. It is important to remember that the IT department and its structure should adapt and ultimately evolve to meet the needs of the enterprise, and not the other way around.

Centralized vs Decentralized IT Structures

The ideal structure of a company’s IT department should include certain standard teams and organizational characteristics, including a support/tech department, IT management (including a bimodal IT management model), enterprise architecture, IT maintenance, network/system administration, IT security, etc.

There are two major IT departmental/structural models an organization can use: a centralized structure versus a decentralized structure:

  • Centralized Structure: A centralized IT departmental model is one where all core IT systems and networks are managed by a central organization, such that all systems can be easily integrated and managed from a single IT central hub.
  • Centralized Structure Pros: better budget control, easier governance, better standardization, better alignment across the entire technology portfolio, easier project/workflow integration, more feasible IT management.
  • Centralized Structure Cons: may become bureaucratic, business departments may be unhappy fighting with other departments to get their tech initiatives prioritized.
  • Decentralized Structure: A decentralized IT departmental structure is one where the management of critical IT components, system controls and networks is distributed amongst multiple, different core IT centers within the overarching enterprise IT infrastructure, allowing different sub-departments and teams to utilize different resources within their own sub-systems/intranets.
  • Decentralized Structure Pros: individual departments/business units have more direct control over their tech projects and priorities; generally decentralized groups can get faster results (less overhead and prioritization fights).
  • Decentralized Structure Cons: solutions optimized at the department level often result in inefficiencies at the enterprise level (“silos” of disconnected data and business processes); too much departmental independence can lead to integration challenges and unnecessarily duplicative systems and data.

Often the best approach is to use a centralized IT organizational model with strong departmental relationships and focused goals, which includes using dedicated resources for specific areas (that are managed centrally). This approach provides the control and efficiency of a centralized organizational model, while also providing departments/business units with a strong influence over the priorities for their respective areas.

Determine How Many Internal vs Outsourced IT Staff You Will Have

The organizational blueprint associated with the structure of a company’s IT department must take into account the differences between internal staff/personnel within the organization’s main structure versus outsourced IT staff that are not a part of the internal departmental teams. Such a structural plan should align with the overall goals of the organization, and should thus separate internal staff (associated with accomplishing certain organizational goals within specified IT teams) versus outsourced staff that are not a core part of the overarching IT departmental structure.

For instance, there are several IT roles that are traditionally fulfilled by internal staff, and several roles that are commonly fulfilled by outsourced staff – however, in today’s global IT ecosystem, there is no clear-cut rule for separating internal staff from outsourced staff. Utilizing the most cost-effective, robust IT resources is key for any growing business, and thus both efficiency (including operational productivity) and overhead (including internal staff training costs) must be taken into account when deciding to use outsourced staff versus hiring internal staff.

While it is possible for businesses to save over 15-20 percent in costs by outsourcing specific tasks to trained professionals, there are times when it is more advantageous to utilize in-house staff, such as for tasks associated with automation, and tasks that are consistent and routine. Using outsourced staff, however, may help to save more money and resources with regard to specific, highly-skilled, non-routine business tasks. Here are some IT roles that are often outsourced to skilled professionals:

  • Support Desk
  • Network Administrator
  • Software Developer
  • Software Tester
  • Engineer
  • Security Analyst
  • Systems/Database Engineer

With a comprehensive IT strategic plan, it is possible for executives to craft the perfect IT departmental structure based on the determinations associated with the enterprise using internal IT staff versus outsourced IT staff.

Roles and Functions Which Must Be Accounted For

Though the ideal structure of an organization’s IT department can vary according to the goals of the enterprise, there are standard functions and roles/teams that every IT department should have within its superstructure.

Service Desk and Support Roles

All IT departments require personnel that are trained and focused on providing technical support to all departments in the event of technical failures and IT issues. An optimal service desk is one that is focused on problem-solving, and has the ability to quickly and efficiently fix issues as they arise, including providing maintenance to IT systems, and helping to prevent future technical problems.  

IT Governance: Program/Project Management, Vendor Management, and Budget/Financial Controls

The four core operations carried out by managers are planning, organizing, leading, and controlling. Within that scope, IT governance requires program/project managers, vendor managers, and IT financial analysts. Within an IT infrastructure, services and projects are based on the specific components of said IT infrastructure. Typically, an IT infrastructure is composed of hardware systems, enterprise systems, software systems, network systems, and database systems.

In order for an IT infrastructure to be utilized effectively, IT sub-departments should include teams for projects/programs, teams associated with technical contracts/vendors, and teams associated with fine-tuning and managing the IT department’s finances in order to provide the requisite resources that are needed by each IT sub-department/team. Each of the above should be managed effectively by skilled professionals, and should include an integrative approach that allows the different, aforementioned teams to work together in a cohesive manner.

Enterprise Architecture

Enterprise Architecture (EA), with regard to IT systems/departments, focuses on the fulfillment of business strategies using IT systems, based on enterprise analysis, design and strategic planning. EA requires a comprehensive, detailed alignment strategy that seeks to translate business goals/needs into pertinent IT solutions and  services. Additionally, Enterprise Architecture aims to assess changes within an enterprise’s industry/operations in order to produce appropriate application portfolios and roadmaps.

Deployment & Maintenance of  Infrastructure Required

In the initial stages of an enterprise’s development, and as a business grows, the dynamic nature of workplace operations translates to a requirement for constant maintenance of IT systems, along with the initial planning, installation, testing, and deployment of IT components. Maintenance workflows may include simple technical fixes, or large system upgrades, along with security patches, updates, and recovery operations.

Networks and Systems Administration

One of the most critical aspects of any modern IT infrastructure is the function associated with an enterprise’s internal network, along with a business’s overall network (including all LAN/WAN, wireless, and Internet access). In conjunction with network security, network and systems administration includes database storage/cloud system utilization, installation of security controls (i.e. firewalls, web application firewalls, intrusion detection systems), a functional and secure network architecture, and constant scanning, testing and traffic monitoring of all network operations.

Additionally, network administration workflows include the effective management of all network operating systems and monitoring systems. With regard to an enterprise’s web services (e.g. web hosting services for a company website), the setting up of a demilitarized zone for the web server, and the use of security controls, is also of importance in order for the business’s external-facing networks (associated with the public Internet) to operate efficiently and in a secure manner.

DevOps Is Becoming More & More Important

The development and evolution of very specific, functional departments within enterprises has often given rise to departmental silos, which sometimes operate as completely separate, distinct micro-organizations within a business that may or may not effectively communicate and/or work together. In order for modern businesses to continue to offer value in an increasingly technology-dominated world, business departments have sought to integrate different departmental workflows in order to increase communications, productivity and operational efficiency.

One significant example is with DevOps, which integrates software development practices with automated testing and IT production operations. Essentially, DevOps combines workflows  – and consequently departmental operations – from the software development lifecycle (SDLC) and IT operations (including testing and security) in order to deliver products in a more efficient manner, while breaking down the barriers of departmental silos within software development firms.

Application Management (Including Software Development)

Application Management is a critical function within any IT department, and includes both Software Development – and the optimal management of an application’s Software Development Life Cycle (SDLC) – and the patching, updating and maintenance of all operational business applications within an enterprise. Application management is necessary in order to ensure that all back-end IT software systems (applications) operate at peak performance.

Information Security

Every IT department should include a skilled, trained team of cybersecurity analysts, engineers, and security testers, to ensure that all attack surfaces are covered, and that the security posture of the hardware, software and networking IT infrastructure is solid. In an age of increasing data breaches, having security specialists to conduct passive and active vulnerability scans/penetration tests, is an important step in maintaining data security, while the installation of security controls (e.g. Unified Threat Management, Web Application Firewalls, Intrusion Detection Systems, Next-Generation Firewalls, etc.) and the routine completion of security analyses (e.g. threat modeling, security scanning, security administration, malware analysis, secure database management/encryption of private data, etc.) are critical.

These steps not only help to protect a company’s customers, but also ensures due diligence to protect the company since many U.S. legislations and compliance standards – such as Sarbanes-Oxley, HIPAA, PCI-DSS – require due diligence on the part of companies to ensure complete data security. Additionally, having adequate security management – in the form of a Chief Information Security Officer (CISO) – is an important step to ensure that all IT security operations are carried out effectively.

The IT Infrastructure Library (ITIL) Provides Some Tried and Tested Approaches

ITIL offers a comprehensive guide to best practices associated with the establishment of an optimal IT department, and the effective execution of IT departmental operations. The ITIL framework offers five core processes that can be used to align all business goals with the IT infrastructure, and by extension, the overarching structure of the IT department:

  • Service Strategy: Aligning the critical business goals/model with the components and services of the enterprise’s IT infrastructure.
  • Service Design: The IT services that the IT systems offer in order to support the business’s operations.
  • Service Transition: The transition from a planning/developmental phase to an operational/management phase.
  • Service Operation: Operating all services according to the service-level agreements in place.
  • Continual Service Improvement: Analyzing and offering improvements for each service in order to increase service quality.

One of the most important aspects of a strategic IT departmental structure is understanding the need for flexibility. Companies grow and expand, while technology changes and products/services – and even business goals – are dynamic. Thus, the established structure of a growing business must include a future projected growth rate, with a plan to optimize – and/or alter the structure of – the IT department, which may include the creation of new sub-departments/teams to solve new problems as they arise. Thus, a scalable IT infrastructure, along with a scalable IT strategic plan and IT structural plan, is critical in a growing business, in order to effectively and strategically leverage an enterprise’s IT infrastructure/department, which can ultimately increase the bottom and top lines of the business organization.