The structure means that the SPST reports to both marketing and technology. This is known as a matrix structure. What are the potential advantages and problems?
Home Depot is the world’s largest home-improvement retail, a global company that is expanding rapidly (about 200 new stores every year). With over 1,500 stores (mostly in the United States and Canada, and now expanding to other countries) and about 50,000 kinds of products in each store, the company is heavily dependent on IT, especially since it started to sell online.
To align its business and IT operations, Home Depot created a business and information service model, known as the Special Projects Support Team (SPST). This team collaborates both with the ISD and business colleagues on new projects, addressing a wide range of strategic and tactical needs. These projects typically occur at the intersection of business processes. The team is composed of highly skilled employees. Actually, there are several teams, each with a director and a mix of employees, depending on the project. For example, system developers, system administrators, security experts, and project managers can be on a team. The teams exist until the completion of a project; then they are dissolved and the members are assigned to new teams. All teams report to the SPST director, who reports to a VP of Technology.
To ensure collaboration among end-users, the ISD and the SPST created structured (formal) relationships. The basic idea is to combine organizational structure and process flow which is designed to do the following:
● Achieve consensus across departmental boundaries with regard to strategic initiatives.
● Prioritize strategic initiatives.
● Bridge the gap between business concept and detailed specifications.
● Result in the lowest possible operational costs.
● Achieve consistently high acceptance levels by the end-user community.
● Comply with evolving legal guidelines.
● Define key financial elements (cost-benefit analysis, ROI, etc.).
● Identify and render key feedback points for project metrics.
● Support very high rates of change.
● Support the creation of multiple, simultaneous threads of work across disparate time lines.
● Promote known, predictable, and manageable workflow events, event sequences, and change management processes.
● Accommodate the highest possible levels of operational stability
● Leverage the extensive code base, and leverage function and component reuse.
● Leverage Home Depot’s extensive infrastructure and IS resource base.
Online File W15.11 shows how this kind of organization works for Home Depot’s e-commerce activities. There is a special EC steering committee which is connected to the CIO (who is a senior VP), to the VP for marketing and advertising, and to the VP for merchandising (merchandising deals with procurement). The SPST is closely tied to the ISD, to marketing, and to merchandising. The data center is shared with non-EC activities.
The SPST migrated to an e-commerce team in August 2000 in order to construct a Web site supporting a national catalog of products, which was completed in April 2001. (This catalog contains over 400,000 products from 11,000 vendors.) This project required the collaboration of virtually every department in Home Depot. (e.g., see finance/ accounting, legal, loss prevention, etc., in the figure). Also contracted services were involved. (The figure in Online File W15.11 shows the workflow process.)
Since 2001, SPST has been continually busy with EC initiatives, including improving the growing Home Depot online store. The cross-departmental nature of the SPST explains why it is an ideal structure to support the dynamic, ever-changing work of the EC-related projects. The structure also considers the skills, strengths, and weaknesses of the IT employees. The company offers both online and offline training aimed at improving those skills. Home Depot is consistently ranked among the best places to work for IT employees.
Questions for Minicase 1
1. Read Chapter 9 (Sections 9.9 and 9.10) regarding teambased organizations. Explain why the team-based structure at Home Depot is so successful.
2. The structure means that the SPST reports to both marketing and technology. This is known as a matrix structure. What are the potential advantages and problems?
3. How is collaboration facilitated by IT in this case?
4. Why is the process flow important in this case?
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