Strategies for Restructuring IT Organizations Copyright CAUSE 1994. This paper was presented at the 1994 CAUSE Annual Conference held in Orlando, FL, November 29- December 2, and is part of the conference proceedings published by CAUSE. Permission to copy or disseminate all or part of this material is granted provided that the copies are not made or distributed for commercial advantage, that the CAUSE copyright notice and the title and authors of the publication and its date appear, and that notice is given that copying is by permission of CAUSE, the association for managing and using information resources in higher education. To copy or disseminate otherwise, or to republish in any form, requires written permission from CAUSE. For further information: CAUSE, 4840 Pearl East Circle, Suite 302E, Boulder, CO 80301; 303-449-4430; e-mail info@cause.colorado.edu STRATEGIES FOR RESTRUCTURING IT ORGANIZATIONS Susy S. Chan, Ph.D. Vice President for University Planning and Information Technology DePaul University INTRODUCTION This case study presents DePaul University's 18 month experience in restructuring its information technology division. The strategic realignment was an integral step in the university's own transformation toward a competitive and responsive institution. In July 1993 the university created a new division of University Planning and Information Technology (UPIT) and appointed a vice president to restructure the division. As the chief architect for this restructuring effort, I will discuss in this paper the impetus for change, the mission and goals of the new division, the organizational design and its implementation, and the process for restructuring. IMPETUS FOR CHANGE DePaul University serves 16,700 students at five campuses in the metropolitan Chicago area. Its seven colleges and schools have, over the past 97 years, emphasized excellence in instruction and responded well to the diverse educational needs of traditional undergraduates as well as working adults. In recent years the university has enjoyed successful strategic growth in academic reputation, increased market share of students, physical plant expansion, and successful fund-raising results. However, as the university moved forward, it became clear that a coherent information technology strategy would be crucial to its continued competitiveness in the marketplace. Prior to July 1993, the university's information technology organization and resources were fragmented: * Information Systems, reporting to the vice president for finance and business, supported administrative users via exclusively mainframe computing. * Academic Computing Services, reporting to the academic vice president, supported faculty and student computing via clusters of mini-computers and wide-area networks. * Telecommunications, reporting to the associate vice president for administration, serviced voice communications and owned most of the communication fibers. There were several attempts to coordinate the computing directions and resources that fell short because of conflicting interests. As a consequence, over the years both academic and administrative users became increasingly frustrated with divided standards for software, equipment, networks, and the absence of a unified, long-range view. A university task force attempted long-range planning to address these issues but was unable to overcome turf barriers. In July 1993 DePaul 's new president, Rev. John P. Minogue, C.M., recognized the urgent need for change. He advocated workgroup computing and the use of technology to effect organizational transformation. A new division of University Planning and Information Technology was formed and a new vice president was appointed to lead the restructuring. Central to this new division was its role as an enabler and change agent to realign information technology initiatives with the university's strategic directions. There was also a mandate for efficient resource management. The restructuring effort, taking place from July through September 1993, resulted in a lean, flattened, and cross- functional organization with new workgroups based upon function, new job responsibilities and new employee skill sets. Four units of different reporting lines and vastly different culture and organizational structure -- Information Systems, Academic Computing Services, Telecommunications, and Office of Institutional Planning and Research (reporting to vice president for planning) -- were consolidated into one division. Several peripheral support functions (i.e., word processing, audio-visual production, student and staff computing purchase) were eliminated. Duplications in functions, such as networking, help desk, training, and software support were consolidated to achieve a single direction. Many new functions, such as business process reengineering and instructional technology, were added. The full-time headcount was reduced by 15%, from 92 to 78. The design for this division and strategies for restructuring are discussed in the following sections. ORGANIZATIONAL DESIGN The restructuring effort positioned the new division in a leadership role to enable the university transformation by performing four inter-related functions: * strategic planning, * process reengineering, * information resource and technology management, and * organizational learning. The vice president's position was designed to carry out these functions in three overlapping roles as a strategic planner, chief information officer, and organizational development facilitator. The new division adopted a team-based, horizontal structure to achieve shared values, responsiveness to institutional needs, and significantly improved performance. Several design principles were considered. First, the division should affect the change process in a holistic manner, from strategic directions, process redesign, tools and infrastructure, to learning and delivery. Second, a flat, cross-functional structure would encourage improved performance and responsiveness. Third, division-wide processes such as training and help desk support should be implemented as cross-functional services. Fourth, the structure should support movement toward workgroup computing. Seven work groups were created to replace formerly large hierarchical departments: Institutional Planning and Research supports strategic planning, policy analysis, decision support systems (DSS) and executive information systems (EIS). Business Process Reengineering implements strategic priorities through process innovation, job redesign, organizational change, and technology strategies. Information and Application Support implements redesigned processes with client server applications, information architecture. Network and Telecommunications provides university wide connectivity in voice, data, and image through local and wide area networks and gateway services. Academic Technology Development supports student and faculty computing for dial-in services, computing labs, and proactive consultation for curriculum innovations and creative use of instructional technology. Systems and Operations provides consolidated systems support for both academic and administrative transactions. UPIT Management Support enhances divisional effectiveness through strategic and financial planning, human resource management, internal and external communications, customer satisfaction studies, and divisional training programs. A team approach was emphasized throughout the division, within and across work groups. A management team was formed consisting of the vice president and all the directors. Within each work group, hierarchical titles were replaced by team-oriented titles, such as project leader and team leader. Cross-functional teams are responsible for most divisional projects. In major projects, users now assume responsibilities as full members of the project team. Workgroup computing envisions that users -- faculty, students, and staff -- will be able to develop competencies in the effective use and management of technologies and information to improve their work. Such an environment dictates that the new division manage and develop network infrastructure, information and application architecture, training, and reengineering that provides users with easy access to needed information. During the reorganization at DePaul these principles demanded a different workforce and skill sets for the information technology division. The mainframe oriented workforce had to be transformed into professionals who were proficient in consulting, rapid application development, greater networking knowledge, effective problem solving and team work, broad organizational perspectives and ability to formulate integrated solutions. PROCESS FOR RESTRUCTURING Restructuring occurred between July and September, 1993. Before it formally began the mission, goals, organizational design, and timetable for implementation were communicated to the members of the new division. The vice president met with individuals and groups, both inside and outside the division, to address concerns and provide support. All directors' positions (except the Director of Institutional Planning and Research) were opened for applications and interview process. The management team was in place by the end of July. Each staff member went through a job analysis process involving data collection through skills questionnaire, functional resumes, and a 45-minute interview with a consultant with psychology training. This process helped to identify opportunities for employee skills enhancement; provide baseline data for job reassessment and reassignment; provide benchmark data for performance review, and enable future reorganization and resource planning. Using this data, the vice president consulted directors, human resource officers, and an information technology consultant to match skills profile with functional requirements for each workgoup. Many individuals were then assigned or offered new responsibilities according to their skills and aspirations. Some functions were eliminated and employees were transferred or outplaced. In order to minimize employee anxiety these steps were completed within the first four weeks of the reorganization. Each director then had two months to develop specific job descriptions and an organizational structure for his or her workgroup. DePaul's human resources office subsequently reviewed each position and re-priced the salary according to market data. CHANGE MANAGEMENT STRATEGIES DePaul employed a variety of strategies to effect change in the new division as well as in the user community. Three sets of strategies are discussed below. High Performance Management To achieve the optimal effect from the restructuring, we designed and implemented a high performance management program. The management team collaborated with the human resource office and consulted the entire division in this process. This program integrates divisional directions with performance planning, the reward structure, and continuous training and development. A new performance appraisal system was initiated to introduce a set of ten performance attributes as basis for organizational change. These ten attributes are: commitment to the mission, continuous quality improvement, creativity and innovation, customer focus, leadership, openness to change, result orientation, self- directed learning, self-empowerment, and teamwork and collaboration. Every member now participates in reviews every six months to evaluate past performance and to set new performance objectives. Training and Development In addition to setting performance expectations, the division adopted a cascading model for training and development. The management team lead and participated in a leadership learning forum which met for one day every six weeks to discuss processes for creativity, teamwork, and change. Participants included nearly one-third of the staff, across all levels and groups, to achieve better working relationships. In addition, three forms of training of technical skills were also implemented: Friday Forums, held every other week, showcase major divisional projects. Vendors conduct technology or product specific training. In addition, the vice president's office sponsors selected individuals for intensive certificate programs in "local area networks," "window applications," "telecommunications," and "client server strategies." Because self-directed training is now a performance standard, employees are encouraged to enroll in formal computer science or relevant courses offered by the university. Partnering with Clients To fully achieve the purpose of restructuring, changes needed to occur in the relationship between the division and the user community. Divisional priorities were set and communicated to the users. These included the timetable for networking, policies for software and hardware support, priorities for major application projects, and funding strategies for network and student computing plans. Two formal advisory bodies were established to improve communications and work plans. A faculty-based academic advisory group concentrates on policies and initiatives affecting teaching, research, and student computing. An IT customer service panel addresses emerging program and service unit needs. Several formal communication vehicles were created, including a quarterly newsletter DePaul Net*Works, a faculty guide to computing, and various brochures. Communication took place in both a formal and informal manner. Vendors also conducted quarterly forums to inform users about technology trends. PROGRESS TO DATE What has the restructuring achieved over the past 18 months? Most noticeable is the fast deployment of network infrastructure with a much reduced staff and budget. Seventeen hundred users were brought into the DePaul Network during this period. This is an environment of Novell NetWare 4.01, Ethernet, TCP/IP on the network side; 486 Window/DOS for the desktop; Microsoft office suite (Word, Access, Excel, and PowerPoint), WordPerfect Office (Groupwise), Internet applications for productivity tools; Oracle, UNIX, MS Access, MS Visual Basic for the client server environment. In addition, the university's fund-raising process was redesigned and new phonathon and donor tracking systems were developed. Building on this infrastructure, projects on the current drawing board include: student dial-in service and Internet access, campus-wide information systems using student kiosks, enterprise data architecture, the redesign of student- centered processes and systems, a new telephone switch at one campus and the wiring of residence halls for data and voice communication. LESSONS LEARNED These changes could not be achieved in such a short timeframe without the restructuring. The restructuring provided a) a clear strategic vision, b) heightened productivity and expectations, c) an accelerated momentum for actions, and fundamentally, d) new dynamics for organizational and self renewal. What have we learned from this experience? Although the restructuring and renewal have now become part of our continuous change process, our experiences so far are both rewarding and challenging. Organizational Change Issues. Implementing radical change in itself is a daunting task. To achieve sustained results, there must be cascading sponsorship, extending from the president and executive level all the way through the information technology organization. This requires constant refocusing of strategic goals and careful selection of the management team. In building a team-oriented organization not only the staff members but also the leadership team has to be trained for team problem solving. Furthermore, once the organization is redesigned for change it is likely to go through self-renewal or further restructuring in response to additional changes in technology, elevation of skills, or user demand. A consequence is that planning assumptions for information technology are more difficult to set. A traditional, less dynamic planning model can become obsolete or counter- productive for fast-paced change. Drastic change through strategic restructuring could achieve high results in short time, but a process for continuous restructuring or process improvement should be considered to sustain the benefits. A comprehensive organization design should be mapped out first to provide a framework for future actions. Otherwise, the forces and resistance to change could derail the plan. There are high costs, especially human costs, associated with restructuring. Employees experience tremendous anxiety and some may lose jobs. Managers experience burnout from dealing with adverse decisions. Few IT managers are prepared to carry out these tasks. Therefore the pace of change an IT organization undertakes depends largely on its willingness to endure pain and stress. Human Resources Issues Radical restructuring tends to freeze people's productivity and destroys the original intent of such endeavor. To balance the pace of change and desired level of productivity, interventions must be considered to bring each individuals into a more human level of communication. Such communication should address fears, anxiety, aspirations, as well as perceptions. For many employees restructuring can provide new opportunities and challenges; a chance to upgrade skills and move into new positions of responsibility. In this regard, leaders and managers in the IT organization have to address the human resource issues in a proactive manner, as to job redesign, outplacement, performance management, and reward structures. Unfortunately, few human resource offices in universities and colleges are equipped to support change management, let alone changes in the technology areas. Therefore, the IT organization has to quickly learn the advanced techniques and strategies for managing change. Re-tooling is one of the most critical elements in restructuring IT organizations. Development of new skills, whether for a client server or network environment, can not be an option for a new organization but some new employees with those skills will also need to be recruited from outside the organization. A flattened, horizontal organization requires team work and, more importantly, strong individuals. Both self-directed learning and sponsorship for targeted training are required to achieve the culture of a learning organization. However, retooling improves employability and employees with new skills are eagerly pursued by other employers, corporate or academic. The IT organization must anticipate attrition and devise retention strategies. Beyond competitive compensation, growth opportunities, systematic training, long-term performance management program, and opportunities for job rotations should be considered. Cross-training has to be a common practice to reduce the impact of staff turnover. In short, a holistic approach to performance management -- from recruiting, selection, evaluation, reward, training to retention -- has to be mapped out before restructuring takes place. Relationships with Users A changing IT organization disrupts the users' established relationship with former organizations, functions, and support staff. Confusion caused by realignment, if not addressed right away, could cause user frustration and anxiety. In addition, the fast paced deployment of technologies, applications, and policies heighten user expectations for service and quality. For many users the new environment demands more intense dialogue between both parties. Communication should occur well in advance of change. There is never enough communication, despite repeated efforts, because new generations of users are continually brought into the technology environment. However, the fast pace of change can motivate users to participate in IT priority setting and learning. This could present a window of opportunity for IT professionals to serve as change agents -- to educate, persuade, and commit users. Formal arrangements for "information leaders" or "one-stop service liaisons" may improve service and communication with users at the departmental level. At the individual level, user training has to be redesigned to include department-wide training when departments are brought on-line, more specific task-based courses, and on-line tutorials and self-paced training modules. CONCLUSIONS DePaul's effort for restructuring the IT organization has achieved remarkable results. Within eighteen months, the division of University Planning and Information Technology was able to build network infrastructure, brought 1700 users into a highly advanced network environment, reengineered major processes, and implemented client server solutions. These changes were accomplished by high performing cross- functional teams with new skills and a shared vision. A framework for organizational design, a thorough process for restructuring, a holistic performance management plan, and strategies for change management contributed to these positive results. Susy Chan, Vice President for University Planning and Research, DePaul University, can be reached at 243 S. Wabash, Chicago, IL 60604, (312) 362-8597, schan@wppost.depaul.edu.