Information technology organization part 2

So in every organization you have several levels. You have the executive level. These are the people who are making decisions for the company. You have the middle level management. These are the people who are making tactical decisions for the company. Then you have the operational management. These are the people who making operational decisions for the company. Then you have non-management people, the people who are doing the works. So basically you have four levels of organization structure in every company.

In every company you hae executive management. Executive management is one who make strategic decisions for the company. Typically in a company, you have a president of the company or the chief executive officer CEO. These are people who make decisions for the company.

But today you also have a chief information officer or CIO. The reason is the business need information technology with someone who can bridge the gap between the business and the information technology. So the role of information system management has a reason to be almost as high as the president, as high as the chief executive officer. CIO is usually the number two or number three in every company, very important people in the company.

At the level of the middle level management ussually you have either vice prsident or a director or a senior manager. These are the people who make tactical decisions. These are decisions made by people who make decisions on a quarterly basic or monthly basic. These are the people who control the budget, control spending, control the business of the company.

So for every director of the business you also have director of information system management. These are the people who manage the information system at the tactical level. So again for every position you have in a business, you have an equivalent position on the information technology.

At the operational management, these are the line managers, the project managers. These are the people who run the business. You also have information technology managers, you have information technology line managers and project managers on equivalent.

So today in every business, from a business point of view you have a manager, you also have an equivalent information system management. So you are having a group purposes of people who are equal basis, who run business the other one is support the business and support the strategic of the company. So throughout every company today, you have side by side business people and information technology people work together. So this is the way, the way almost every large companies and small companies today are operated that way.

I understand that some of you may not see that kind structure yet, but these are things that are happening at all over the world. So it is very important to understand the role of information system management. How those roles have involved througout the years and occupy very important position in every company, in every business?

Information System Management have basically three levels: executive level, these are CIO, chief information officer or president. These people make decisions or a strategic decisions about the products and the services, that they will provide in the company.

You have the middle level management, these are the vice presidents, or directors or senior managers. These are people who run programs, and plan for the senior executives. And then you have operational managers, these are the people who run day to day business. These are project managers, these are the business units, these are people who run day to day activities, who are managing the people, the workers, the information technology engineers. These are people who work at the day to day business.

So you have three levels: the strategic level, the tactical level, and the operational level. Those are the ways today we structure information technology management into three levels. At the highest level, or at the business level, the business process, the way the company does business were defined the activities that requires information to support them, to create either a product or a service to the customers.

Either you sell something to the customers or you provide services to the cusomers, okay. You have two areas: products and service is very important for the student to understand and distinguish between those too. You create a product, the product can be anything. And you provide a service, the service supports the customer.

So if you are a manufacturing company, you are selling something, you create something, that is a product. But when you provide a service, you support the selling, you support the maintenance of the product, they call services.

Information Technology are the activities that will make the creation of a product and services possible, the enabling the business to achieve the goal. And of course the goal of business is profit, is making money. If you are a business, and you don’t make money, you lose, right. You have to close the business, you cannot operate business and losing money. So the value of the business is how much money, how much benefit that you are create, how much value that you create for the business.

So it is very important for the business and the information technology integrating or alignment. They have to fuse into one to create a competitive advantage for the company. Because without the information technology the business operates at a very old way, very inefficient, very slow. And of course today you cannot operate business slowly, you have to operate the business twenty four hours seven day a week. You have to operate them very very fast, very efficient, so you do need information technology.

So you cannot say information technology support me, you have to say information technology system and business system have to work together, have to full integrate. That is what business information technology have to be a part of each other, side by side. So to do that, because the company will create a product, selling the products, and then creates a service, so information technology is also devided into two different groups: one group is called development, the other group is called operation. Okay.

The development group will analyze business needs, determine the capability, and build the software solutions to support the business. But once development is completed, the running, the maintenance of the software will become the responsibility of the operational group. The operational group or maintenance group are today they call services. They focus on what information technology can do for the business. And it will help to manage the business efficiently and effectively by balancing the cost, the time, and the quality.

This is very important concept and I want to go over again because you will see that in information technology there are always two key functions: the development function and the operational function. In a typical company the development groups are relatively small, the operation or service groups are very big because they are enabling the businesses. The development group are focusing on creating the solutions, the operation group is focus on enabling the business by using those solutions to help the business operate efficiently. Okay.

So today a lot of theories, textbooks academic are focus mostly on the development of solutions. But they don’t understand the services or the operations. But the operation is one that is more important because they are the one that are fully integrated with business, supporting the businesses, running the day to day business. They are operational of a company when the development groups are very much tactical, the solutions for the business.

So if you need to do something, the development group will create solutions, maybe write a software application that help you to do something fast. But when they complete the implementation, the job of running the software, operating the software, supporting the business, collecting data and enabling the business belong the operation group. So every IT organization has a development group and operation group.


  • Blogs of Prof. John Vu, Carnegie Mellon University