Transformation of the Current IT Organizational …

Transformation of the Current IT Organizational Design Model -

An Exploratory Discussion

Final Report

November 6, 2013

Doug Foster, Pam Horne, JoAnn Miller, Mitch Springer Subcommittee of the Operational Oversight Committee, under Gerry McCartney, V.P. Information Technology

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Table of Contents

Operational Oversight Committee (OOC) Round #5 Project Team Members............................... 4 Product Delivery Dates ................................................................................................................... 4 Executive Summary ........................................................................................................................ 5

Recommendations ....................................................................................................................... 5 Scope Statement.............................................................................................................................. 6 Context............................................................................................................................................ 6 The Matrix Organization Design Model......................................................................................... 7

Matrix Model Advantages........................................................................................................... 9 Matrix Model Disadvantages ...................................................................................................... 9 Cost Avoidance versus Cost Savings............................................................................................ 10 The Current Purdue IT Model....................................................................................................... 10 Current Decentralized Academic Computing Purdue IT Model Advantages........................... 11 Current Decentralized Academic Computing Purdue IT Model Disadvantages ...................... 12 Primary Consideration for Purdue IT Model Selection ................................................................ 13 Cohort Considerations for Use...................................................................................................... 13 University Centralized IT considerations for use...................................................................... 13 Academic Unit Considerations for use...................................................................................... 13 Strategic to Tactical Information Technology Organizational Model Perspective ...................... 14 Examples of Currently Employed Matrix Models........................................................................ 16 Business Services Matrix Model............................................................................................... 16 Human Resources Matrix Model .............................................................................................. 17 ITaP Administrative Computing Matrix Model........................................................................ 18 Successful Cross-College Collaborative Enterprise Solutions ..................................................... 19 Merger of ECN and TCN .......................................................................................................... 19 Collaboration of ProEd and ProSTAR ...................................................................................... 20 Conclusion .................................................................................................................................... 21 Recommendations......................................................................................................................... 21 Areas for Further Research ........................................................................................................... 22

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Appendix A - Alternative Organizational Design Models ........................................................... 24 Theoretical or Heuristic Models................................................................................................ 24 Traditional Design Model ......................................................................................................... 24 Traditional Model Advantages ............................................................................................. 25 Traditional Model Disadvantages ......................................................................................... 26 Product Design Model............................................................................................................... 26 Product Model Advantages................................................................................................... 27 Product Model Disadvantages .............................................................................................. 27 Matrix Design Model ................................................................................................................ 28 Matrix Model Advantages .................................................................................................... 29 Matrix Model Disadvantages ................................................................................................ 29 Project Management Design Model .......................................................................................... 30 Project Management Model Advantages .............................................................................. 31 Project Management Model Disadvantages.......................................................................... 31 Criteria for Selecting an Organizational Structure .................................................................... 31 Summary Remarks .................................................................................................................... 32

Appendix B ? CoE/CoT Distance Education Collaboration Whitepaper ..................................... 33 Overview ................................................................................................................................... 33 Collaboration will Decrease Total Costs................................................................................... 33 Potential for Increased Scale and Revenue ............................................................................... 33 Previous Successful Collaborations .......................................................................................... 34 Future Possibilities for Collaboration ....................................................................................... 34

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Operational Oversight Committee (OOC) Round #5 Project Team Members

Doug Foster Pam Horne JoAnn Miller Mitch Springer (Team Lead)

Product Delivery Dates

Teams established: 7/01/2013 Finalize Project Scope and submit: 7/22/2013 Interim report due: 8/26/2013 Executive Summary due: 11/13/13 Final report due: 11/15/2013

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Executive Summary The Transformation of the Current IT Organizational Design Model subcommittee of the Operational Oversight Committee, under Gerry McCartney, V.P. Information Technology, was formed to better understand and frame the factors impacting the transformation of the current Purdue University Information Technology (IT) discipline-specific organizational design model. The committee reviewed the following areas of attendant interest prior to making recommendations and suggesting opportunities for further study.

What are the theoretical and experiential efficiencies and effectiveness of centralized versus decentralized organizational design models?

What are the units of IT bifurcation within the academy and their associated interests (differentiation of branches)? And, can bifurcated unit positions be differentiated from their true underlying interests?

What are strategic to tactical IT organizational model perspectives, and, what impact does that have on model determination?

What discipline-specific campus examples exist of currently employed functional matrix models?

Organizational design models attempt to align the three variables of accountability, authority and responsibility to gain maximum efficiency and effectiveness for the organization. A direct effect of increased efficiency is a reduction in costs, frequently referred to as cost avoidance or cost savings. Our final determination of an appropriate model is premised on cost savings, versus the alternative of cost avoidance. An section was added to this report differentiating cost savings from cost avoidance.

Recommendations Based on the findings of this study, there are insights gained which provide valuable suggestions toward future success.

Given the above shared interests, as well as similar interests, the organizational model most likely to satisfy both cohorts would appear to be a matrix model.

The centralization (matrix model) of information technology personnel will require a collective will and firmly executed decision authority on the part of Purdue's senior leadership.

To successfully implement the suggested organizational model change, it is imperative we address and differentiate between operational and tactical objectives of the academic units. The operational objectives should focus on "what I need to do", versus the "how to do it" focus of tactical objectives.

The proposed matrix approach requires the establishment of "communities of practice" attendant to key hardware and software solutions.

Common computing hardware and software is not simply a practice used in business and industry, but one which will provide significant efficiency and effectiveness as well as cost savings to Purdue University and its academic units.

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Scope Statement

The Transformation of the Current IT Organizational Design Model subcommittee of the Operational Oversight Committee, under Gerry McCartney, V.P. Information Technology, has been formed to better understand and frame the factors impacting the transformation of the current Purdue University Information Technology (IT) discipline-specific organizational design model. The committee will seek insight into:

Efficiencies and effectiveness of centralized versus decentralized organizational design models

Elements of IT oriented bifurcation within the academy (differentiation of branches) Cohort considerations for use Strategic to tactical IT organizational model perspective Examples of currently employed functional matrix models

The final report will document the findings of this committee with recommendations for further study.

Context

Purdue University has the opportunity under the leadership of President Daniels to continue to be and enhance our reputation as good stewards of state appropriations and student tuition. In response to declining state revenues and student tuition freezes, Purdue is poised to lead the nation in becoming a model for efficiency and improved effectiveness.

On January 18, 2013, President Daniels's Open Letter to the People of Purdue, makes explicit reference to higher education as we know it being poised for big change. He highlights treatises on challenges faced by higher education today:

College costs too much Administrative costs have run up the cost to students without enhancing the value of

education Rigor has weakened The system lacks accountability

President Daniels goes on to say "..the operating model employed by Purdue and most American universities is antiquated and soon to be displaced..." In response to these many concerns and criticisms, President Daniels offers suggestions for collective thought and action, to name a few:

Excellence ? "Purdue is not its buildings, or even its wonderful past or traditions ...this would be a great university if it met in a tent." Purdue is its faculty and students and what happens when brought together effectively.

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 Affordability ? "...every university community should embrace the shared responsibility to reexamine current practices and expenditures with a determination to keep its tuition and fees within the reach of every qualified student"

Shared governance ? "..shared governance implies shared accountability. It is neither equitable nor workable to demand shared governing power but declare that cost control and substandard performance in any part of Purdue is someone else's problem. We cannot improve low on-time completion rates and maximize student success if no one is willing to modify his schedule, workload, or method of teaching"

Common purpose ? "...the widespread duplication of identical functions can work against the common goal we must have of affordability and liberating resources for new investments in faculty and facilities... many choices will necessitate a communitarian outlook that consciously places the interests of the overall university first"

President Daniels's Open Letter to the People of Purdue makes reference to being good stewards, creating efficiencies, becoming more effective, reexamining current practices and expenditures, and addressing the duplication of support function services. These and many other references to our multiple email systems or web development tools are indicative of areas for improvement and alignment to our current mission.

The purpose of this report is to open dialog on one aspect underlying these many references, namely, the duplication of resources and increased costs attendant to the bifurcation of Information Technology personnel between the central structure and the academic units.

The Matrix Organization Design Model

The manner in which an organization groups work and people is referred to as an organization's structural design, or its organizational design model. As an organization evolves from a small entrepreneurial entity to a mature and evolving on-going concern, so too does its organizational design model evolve. From a theoretical and experiential perspective, Appendix A discusses the evolution of these many organizational models and their attendant advantages and disadvantages.

Premised on the conclusions and recommendations of this report, the matrix organizational design model is discussed at this time for reference purposes.

The matrix structure is a hybrid organization that attempts to balance the use of human resources as people are shifted from one project to another. It can be viewed as a project organization superimposed over a functional organization. The figure below is an example of a typical matrix organizational structure.

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Taking the above and converting it to terminology specific to higher education and Purdue University specifically reflects the model below.

Hovde Administration

ITaP

Strategic Resources

Optimization Resources

Support Resources

Academic Unit 1

Academic Unit 2

Academic Unit 3

Functional Responsibility

Academic Unit X

Academic Unit Responsibility

The matrix structure is more complex than either the traditional or product-oriented structures. To this end, it requires basic ground rules to be successful:

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