How can competing IT departments work in an organisation?

Question

I've seen various organisations where the IT departments work very inefficiently. That is, routine tasks (adding new users) are slow enough but anything remotely unexpected (providing a new server for a tool under development) is painfully slow, requiring meetings, presentations and months or years of lead time.

This last case got me thinking: it is not hard to arrange a server. How hard would it be to set up a competing IT department offering services to employees, and let the best department get the most users and budget? I also thought this after realising that one department has a monopoly and less incentive to develop, unlike departments that interact with the customer and know that, if they do not adapt, the customer can easily go to the competition.

One problem with this is infrastructure - the existing department already maintains so much.

How can competing IT departments work in an organisation?

Answer 1

What you are looking to do is play with fire. I have created IT departments in the past, it's not hard, but what you are looking to do is compete inwardly for resources, and to share what is already there. This is a terrible idea.

The main IT group if like most IT personnel will see this as a threat and find a subtle or not so subtle way to keep the new IT group from obtaining the ability to do their job.

This is something you don't want or need. If your IT group is not doing what it meant to do, which is to interact and work with the people that it is meant to help, then perhaps what you really need to do is some spring cleaning.

If you are serious about creating a new IT group, have it report to the main IT group, but make it be the IT group that deals with the menial details such as printer problems, etc...and have the old IT group deal with Tier II or III problems.

Answer 2

I would offer the concept that this type of competition does exist - outside the company. The outsourcing of IT is a huge trend, at least in the US - and it appears to succeed when another group can do the work more efficiently from either a cost or quality perspective than the in-house staff. I'd also offer the idea that over time more and more IT functions will morph into non-internal solutions - for example, cloud services instead of in-house storage systems. Just like COTS products that can be widely used across companies replace custom built software when the need can be generalized.

I'll be honest that I've never heard of what you propose. I have seen cases where two groups of a company provide competing IT capabilities, which eventually leads to a grossly inefficient turf war, the end result of which is usually the elimination or amalgamation of one of the two groups, or a case were executive management has to brutally delineate the lines.

I'd posit that within a company, the idea of dividing into competing groups doing exactly the same thing has the following problems:

• Corporate inefficiences are not often unique to a group - there are cases where a single department is badly managed, but if inefficiencies are widespread, another competing group will only add to the problem. I've seen plenty of inefficiencies introduced by finance, security processes, management structures, and the corporate need for consensus or massive CYA activities. A second competing group won't fix any of this.

• The best case for internal IT is when there is a need for single ownership and one identified responsible entity/decision maker. This comes up in security - you can't have two groups assessing/fixing security without chaining it up to a final decision maker - or else you'll generally wind up with a kludged together, insecure system that no one can reconcile. In these cases, competition will do you more harm than good.

• When one entity pays the bills, competition is rarely the most efficient option. Having two groups do the same thing differently is going to lead to a redundancy. I'd have a hard time understanding the busienss case for the redundancy, as the company could end up paying literally double for the work in the end.

When it comes to fixing internal processes while keeping them internal, instead of true competition, I've seen cases where a given up and coming group or manager is given a peice of particularly slow work. The team is tasked with speeding up that one function and given particular driving milestones. If the work is part of other teams, the work responsibility is removed from those teams, or their work is de-emphasized. If the new team can do the work better - it survives and thrives and usually takes on more work... and there's usually and upper management buy in to removing obstacles.

Once the work speed improves, there are usually reductions in the teams that couldn't get it done to start with...

Answer 3

My best guess is that you'll end up with twice the staff and management, twice the base costs and twice the marginal costs for the same amount of revenue being brought in.

Back in the 1990's, departments used to run their own servers and LANs due to IT resistance to deploying LANs. Later, these LANs were consolidated under IT. You could call the departments deploying and running their own LANs (and writing up their own apps) as competition to IT, but at the end of the day, the decisive argument to eliminate the other departments was not competition. Instead, the reasons for centralizing were for control, economies of scale, not having services duplicated, etc.

@CMS:

Let's get back to the fundamentals. Competition is not only about providing more and better goods and services at a cheaper price than the competition, it is also about providing goods and services that the competition is NOT providing, either because the competition can't or because it doesn't want to.

Centralized IT refused to provide the LAN services that the departments wanted, but the proliferation of the LANS provided centralized IT the motivation to act. On one hand, IT won the battle by establishing full control of LAN services. On the other hand, the price that IT paid was that it had to work out a way to provide the very same LAN services that the departments wanted. So, you could say that IT won the battle by losing the war.

The same scenario is being replayed with respect to cloud services, even as we speak: centralized IT refused to have anything to do with the Cloud, individual departments started going into the Cloud using their petty cash since cloud services are so affordable, and centralized IT is making the departments give up their uncontrolled access to the Cloud in exchange for centralized IT establishing controlled access to the Cloud. Again, centralized IT is winning the battle but only at the cost of losing the war.

The ultimate result is that IT wins by eventually providing the services required at a better cost and less aggravation than the departments could for themselves. If for example, every department had its own individual access to the Internet instead of shared access to the Internet, the cost to the company as a whole of keeping that access to the Internet secure would go through the roof. That's what economies of scale is about.