Transforming Information Technology into a Global Strength
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The CEO of one of the world’s largest engineering and construction companies determined it was necessary to centralize its Information Technology function. The shift, if properly done, would allow the company to streamline IT processes and take advantage of collective expertise to better serve customers and lower costs of operation.
Moving from a multi-national, distributed function to a single one with global responsibilities is difficult. The company CIO, responsible for this restructuring, relied heavily on an annual Organizational Network Analysis (ONA) over five years to make this transformation a success.
The company had grown through many mergers, resulting in fragmented and widely varied IT-related processes, ranging from infrastructure support, to CAD technology and even IT strategy. Multiple e-mail, ERP and financial systems led to multiple problems. Each group reported to different leaders, with different goals. Best practices were not systematically adopted.
The main drivers for consolidation were to establish a set of processes so that internal and external customers received a consistently higher level of service, and to provide leading technologies and practices for the best solution. Streamlining processes were expected to bring IT costs down and improve the ability to be creative and solve problems.
Once the new IT function was formed, the CIO initiated a network analysis to examine the levels of collaboration across roles and regions to determine how people were integrating into the new organization. The ONA was conducted annually for five years, with a focus on three key dimensions – silos across functions and locations, awareness of expertise, and people most and least connected – which were measured to track progress toward goals.
The first ONA was eye-opening.
The first dimension that was evaluated was cross-function and cross-location silos. Some fragmentation was expected, but not to the degree revealed by the ONA. It turned out that people continued to work with their previous, pre-reorganization colleagues instead of reaching out to others across the organization. To shift this pattern, cross-organizational teams were formed, bringing together well-connected employees from different silos to work together on critical projects or issues. Training and off-site meetings were provided to the teams to build relationships with people they did not know but were likely to be valuable colleagues.
The second dimension evaluated in the initial ONA was the level of awareness of IT expertise. The ONA revealed that people with similar expertise were not well connected, and in some cases, only one or two people held key knowledge. Targeted team-building meetings among expert groups were held with the goals of building trust, improving team dynamics and communications, and strengthening the relationship of the leader with their team. Exchange programs were also established to build relationships across locations.
Lastly, the ONA highlighted people who were highly overloaded and those who were on the periphery of the network.
Management was concerned that highly connected people were overloaded, resulting in organizational bottlenecks. To address this, overloaded employees were helped to shift portions of their role to other talented employees. Management also worked to ensure that newcomers were integrated more quickly and to re-engage peripheral high performers so others could benefit from their skills.
An additional problem revealed by the ONA was the fact that, while senior leaders were collaborating well, managers lower in the hierarchy had few relationships. The organization showed a high turnover rate within this population, which stifled best practice transfer and innovation. To overcome this, first- and second-level managers were trained on how to build relationships with virtual team members, how to communicate a vision and identity to unify the team, and how to effectively use tools to work virtually.
In addition to the group-level insights, individuals were given personal reports to improve their own connectivity based on their unique position in the network.
Given the rich findings, the ONA was repeated every year to assess the current state and to plan and set goals for following years.
Each year, the IT function became more and more integrated, resulting in lower costs as well as the ability to respond to customer needs more quickly and with better solutions.
Improvements in information-sharing networks showed notable improvements in just two years. Similar dramatic improvement was seen in the energy network as well [see network map below].
After five years, IT costs were reduced from 5.2 percent to 3.6 percent of gross revenue. The company had continued to grow during this time, but the IT staff actually declined 16 percent.
Also during this time, customer satisfaction scores rose from 93 percent to 99 percent.
The effort to raise awareness of IT expertise and bring in people on the periphery was also effective. The gap between the number of relationships for the high performers compared to all others decreased from more than 32 percent to just seven percent. Awareness of expertise jumped, along with a rise in effective information usage, from 29 percent to 45 percent.
In addition to providing targeted insights for cost reduction and internal integration, the ONA also enabled the IT function to develop more effective collaborations with key business partners. Internal customers, who previously outsourced important and complex projects, learned to depend on the new organization.