The Entrenched IT Department gets a "Heave-Ho"

The following article appeared in a reading list related to CIOs. Seems CIOs are on the hot seat lately, partly for good reason. I look at this article and wonder why almost half of the staff reduction at Citi is from the IT departments? Are they that overstaffed? Are they ineffective? Apparently "yes" is the appropriate answer based on Michael Corbat's comment, "...(Citigroup) identified areas and products where its scale does not provide for meaningful returns." 

In my mind, when an IT group (or any group for that matter) no longer responds to the business they are supposed to serve, it results in statements like the one above. If CIOs are to be able to prove their worth and provide meaningful returns they will need some radical shifts in thinking and action. No longer will they be able to think of themselves as keepers of the keys of technologies, but evangelists and enablers of technology where it can deliver nimble, agile and effective solutions. That's a game-changing difference in perception and action for IT execs, management and everyday technicians and coders. 

Citigroup axes 5,000 technology and operations jobs

Kathleen Hall Published: 05 Dec 2012 From SearchCIO.in

Citigroup is to lose more than 5,000 IT and operations jobs as part of the banking giant’s axing of 11,000 jobs globally.
Some 40% of the jobs being cut in the firm’s Global Consumer Banking arm are to come from IT operations and technology functions, resulting in the loss of 2,480 jobs.
Losses in its Institutional Clients Group operation will see 1,900 positions go, of which more than half are in the operations and technology functions that support the business.
By reducing its global workforce by 4%, Citi expects to record pre-tax charges of $1bn in the fourth quarter of 2012 and approximately $100m of related charges in the first half of 2013.
Michael Corbat, CEO at Citigroup, said the bank had identified areas and products where its scale does not provide for meaningful returns.
“We will further increase our operating efficiency by reducing excess capacity and expenses, whether they centre on technology, real estate or simplifying our operations," he added.
Citi's operations and technology function is expected to achieve greater efficiency through increasing standardisation and the use of automated processes, streamlining the organisational structure, and consolidating functions and moving certain positions to lower-cost locations, said the bank.

I'll have to take some issue with Mr. Corbat's final statement in the article. Standardization and streamlining organizational structures, even consolidation don't result in substantive change which results in real innovation or a competitive edge. It's just the same old 'bean-counter' mentality of cutting costs with a large scythe and hoping the results will justify the actions. Too often we have seen this only exacerbates the issues. While I do agree most corporate structures carry way too much fat and waste along than is good for them. Just going to the clinic to have liposuction isn't the real cure, a good dose of mindset change has to accompany the surgery at the same time.

In my mind, the change in mindset should happen first and if the fat doesn't fall away with the change in mindset, then surgery might be in order. Well, let's watch and see if the surgery has the desired effect. Don't be surprised if you see more press about other major elements of Citi being reorganized with surgery. From our viewpoint, stopping some stupid activities would probably be far more effective and result in realignments and reductions where really needed in IT and other areas as well.