How to design and build a multimodal IT organization

26 May 2020 Consultancy.eu

Seeking to deliver on their digital transformation agenda’s, companies across the globe are increasingly adopting a multimodal approach for organizing their IT and technology. A guide on what a multimodal IT organization is, how it differentiates itself from the traditional ways of organizing IT, and how to successfully implement the approach. 

With technology and data today an indispensable enabler of strategic objectives and innovation, the way digital transformation is organized and hence delivered is becoming more important than ever. This is seeing new, and more modern and effective models of organization surface, compared to the traditional centralized governance approach.

One popular model is the multimodal approach, which builds on a more granular and bottom-up view on the ideal organization of technology, based on the characteristics of specific business domains, its subcultures and the related technology solution. The model also advocates a more ambidextrous view as to how IT organizations should balance stability versus agility in their pursuit of delivering business value. 

Ways of organizing IT

Management consulting firm Anderson MacGyver has over five years of experience in designing and building multimodal IT organizations (the term was first introduced by Gartner in 2015) at companies across Europe. Leveraging their experience in the field, experts Albert Sprokholt, Gerard Wijers and Edwin Wieringa unpack on what companies should consider to adopt a multimodal IT organization. 

A framework for a multimodal IT organization

A multimodal organization organizes the required capabilities into diverse technology teams directly addressing the needs of a specific business domain. The number of technology teams depend on the purpose and the size of the business: more diversity will require more organizational teams. The capabilities needed within a team depend on the nature of the business itself, its subculture and the technology required to support that (specific) business domain. 

Technology is organized into business domain specific teams with specific characteristics for technology and organization. Bundling technology services with focus on the business into business domain specific teams, has a lot of advantages when closeness to the business activity is required, such as working with agile teams, special know how, specific performance requirements, criticality and continuous improvement. 

However, a strong overall central technology governance function is required for coordination. This function defines and monitors standards and policies to govern goal setting, allocation of resources, architectures describing how technology services and systems are working together, and data governance. 

A multimodal IT organization

A multimodal organization is typically organized into three layers with a specific responsibility:

A leadership and steering layer

Needed for the overall technology organization to lead and govern technology and data. This layer is organized at enterprise level under the CxO by activity domain, grouped by expertise and role. The main responsibility at this layer is to:

  • set a digital vision, digital agenda and digital strategy
  • define priorities and investment selection
  • design an architecture to support the business activities and digital strategy
  • manage the key technology capabilities and sourcing
  • manage the cohesion and consistency across the organization
  • set policies and requirements with regard to compliance, security and continuity 

An execution layer

This layer delivers the technology services to the business in accordance to business requirements and related service requirements. Delivery of services includes the design, maintenance, sourcing management, production, performance, support, training, continuous improvement and adaptation of the services to change in business needs, in technology or in legislation.

This layer can be split into two sub layers: a business focused layer and a platform technology layer.

The business layer with business technology teams focuses on technology clustered into business domains and supporting the primary or supporting business activities. These teams can offer any kind of technology, however the actual technology service fits the dominant type of business activity within the specific domain 

For example: a business technology team for human resources typically delivers ‘common’ technology, whereas the business technology team for marketing and sales primarily provides ‘value-add’ technology. The online service team develop most probably distinct technology services developed in-house whether or not with the support of third parties or in using standard components from the market creating unique and distinct solutions. 

The platform technology layer with technology teams have an internal and supportive focus on the delivery of company-wide common infrastructure and common platform technology services (applications and data). Delivery of these services includes the continuous improvement and maintenance of these services, and the integration of technology and enterprise data management. 

Modalities in the business and IT layers

An independent control layer

This layer verifies the follow up on guidelines and principles, goal achievements, compliancy, security, audits, securing know how, privacy and integrity, and reports to various stakeholders and the board. Control takes place at enterprise level as well as at lower levels like a business unit level. 

It is important that the different control levels are connected and organized in a such a manner that the reporting line is not mixed-up with the operational reporting lines. The control layer is responsible for validation of:

  • the execution within the Execution layer complies with the objectives, guidelines and principles set by the leadership and steering layer
  • the know-how and business continuity are secured
  • the risks are under control by appropriate mitigation measures
  • the planned benefits are obtained

Organizing data and technology

In the multimodal IT organization, organizing data and technology differs fundamentally from the more traditional way of organizing technology, which is very much based upon the idea to organize everything according to standardized technology processes and a one size fits all model. 

The business technology teams are preferably managed close to the business activity (functionally or hierarchically) in order to maintain short communication lines and enable effective knowledge sharing. The more business specific and the more business value is created, the more a business technology team should be managed by the business. 

However, if there is an opportunity for economies of scale or sharing of capabilities or platforms, it has to be validated if these services could be managed by a platform technology team supporting multiple business domains. In many cases common platforms or capabilities can be distinguished when analyzing the technology services is part of a specific business technology domain. 

Connectivity, security and privacy, data management and integration of technology are usually the responsibility of the teams within the Platform technology layer. These activities are for the common good of the entire organization and require central management and control in order to comply with the policies in place. 

The CIO office

The CIO office

The CIO office and its capabilities can be organized under a CIO. The CIO office provides direction to the technology vision and strategy of the company by providing enterprise architecture and standards. The CIO office can be organized partially as the responsibility of another CxO as well, when the center of gravity is at a specific strategic domain of the organization like Marketing or Business Development.

The leadership and steering layer in the model is key for success: providing the right guidelines and controls on enterprise architecture and data management to make sure that integration of services can take place and company data can be managed according to the principle of ‘one version of truth’. The technology portfolio and the project portfolio are managed by the CIO office. The company is governed on a budget allocation mechanism (capacity allocation) which directs resources to business and platform technology. 

The platform technology teams are in most cases organized under the responsibility of the CIO; however, the model allows for other options as well. Platform technology teams which focus on data, integration and specialty technology can also be organized in specific technology knowledge and expertise groups which may be based on co -sourcing models with suppliers.

For more information, download Anderson MacGyver's white paper ‘Defining the multimodal organization’.