The 3 models of IT organization

The Information System is like the nervous system of the human body. It transmits information that drives the company forward.

We observe 3 types of CIO in companies, depending on the maturity or importance of the role of their Information System. The way the IT department is organized often reflects the company's relationship with its Information System.

3 organizational models are emerging, offering each company the possibility of defining the most appropriate for its IT Department: the IT Department for execution, the proactive IT Department and the core business IT Department.  

What is your current IT organization model? Are you moving to another model? Being aware of where you are today also enables you to anticipate where to go tomorrow.

ISD for execution

The CIO organizational model for execution is one in which IT is not a strategic differentiator in the company's product or service offering to its customers. The IT Department acts as a one-stop shop for business requests. It reports to the Finance and Administration Department, and is perceived as an expense center whose aim is to optimize costs.

In this context, it is understandable that the CIO's role is primarily operational, striving to maintain operational efficiency at the lowest possible cost. In this type of organization, the IT Department does not need to be present on the Executive Committee (Codir).

An IT department for execution can be remarkable in terms of performance, but remains in a position to support the Business Units.

A proactive IT department

As part of the proactive CIO model, the Information Systems Department positions itself as a driver of value creation, primarily oriented towards internal needs.
Its objective is to understand and anticipate the requirements of the various business units. To this end, it adopts a vigilant approach by constantly monitoring industry developments, seeking to identify emerging trends and trying to stay one step ahead.
For example, if the IT Department identifies a major transition towards the use of AI-based technologies in the industry, it may take proactive measures to develop internal skills, establish strategic partnerships or recommend adjustments in the existing infrastructure.
The IT Department strives to be operational as soon as needs materialize. In terms of organization, the IT Department may be attached to General Management or to the Finance and Administration Department, and its presence on the Executive Committee may vary.

In this case, the IT Department is a source of internal value creation.

The Core Business IT Department

More and more companies are creating software as part of their product or service offering. This software serves to differentiate the company from its competitors. They are unique to the company. The Information Systems Department (ISD) takes charge of these projects, positioning itself as a Research and Development (R&D) team.
The ISD then becomes a strategic element of the company, contributing through its work to the creation of products or services that ultimately generate profits. It is part of the Codir because it helps to make the difference.
A concrete example of this dynamic can be seen in major players in the sector, such as pure Internet players or fully digitized companies, but also in players such as banks and insurance companies, where information processing is at the heart of the business.

Where are you now and where are you headed?

The three types of CIO do not operate in the same way, nor do they have the same objectives, and companies often inherit a specific model that needs to evolve. Given the complexity of this transition, the use of an interim manager with equivalent experience proves to be a real asset in ensuring the success of this process.

It's essential to choose the right model for your company's maturity. In the early stages :

• The IT department focuses on streamlining technical processes.
• It is often perceived as a cost center.
• The IT department's understanding of business needs is limited.
• Priority is given to a stable information system, minimizing modifications.
• Projects are managed according to the annual budget, regardless of the pace of sales.
• The information system is constrained by an ERP system that is slow to evolve.
• Projects follow a "V-cycle" model (specifications, development, acceptance).
• Subcontracting is perceived as a constraint.

As the company matures :

• The IT Department gets closer to the Business Units and understands their challenges.
• It becomes a source of value creation and profit.
• It demonstrates its ability to reconcile business and technology.
• Priority is given to the speed of IS evolution, thanks to new architectures.
• Projects are financed by the Sectors on an opportunistic basis.
• IS rapidly integrates multiple solutions communicating via APIs.
• Projects are prioritized on the basis of value creation.
• Permanent prototyping is becoming the rule.
• Outsourcing becomes an opportunity to speed up processes.

The different CIO models present distinct approaches that respond to the changing needs of companies, depending on their maturity. Transitioning from one model to another can be a complex challenge, but is essential if we are to adapt effectively to the changing technological and business landscape.

If these descriptions raise questions about the current positioning of your IT department, or if you are considering a change of direction, you can contact Infortive Transition.
An experienced Transition Manager can provide you with the expertise to guide this transition, ensuring the company's success in adapting to an IT department model more in tune with its current and future needs.