Discussion: Cognizant and TCS

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Discussion: Cognizant and TCS

Discussion: Cognizant and TCS


It also hampered the company ’ s business of systems development. Thus, neither of these organiza- tional structures was working well. Neither structure was well aligned with the business strategy and the IS strategy.

However, Cognizant found that despite these problems, some work teams were working and performing well. Upon an extensive analysis of those groups, the company decided to adopt a matrix structure of comanagement throughout the company.This change improved customer relations but brought about new headaches on the technical side. Under the new arrangement, managers had to spend their days with cus- tomers and unexpectedly ended up spending their nights with software engineers to clarify customer requirements and fi x bugs. This created a tremendous strain on managers, who threatened to quit.

In contrast, TCS’s organization chart reflects a focus not only on current customers but also on future markets. That is why it added major units called “New Growth Markets” and “Strategic Initiative Unit.” The Business Pro- cess Outsourcing and Small and Medium Enterprise solutions in this latter major unit indicate the strategic direc- tions that TCS wants to take. The organizational structure is designed to emphasize these new growth areas and facilitate information flows along these lines in the organization. Its focus is on building an ever bigger market for its IS and the IS services that it provides.


Vertical Functions Software Engineer

Business Manager Customer 1 USA

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Business Manager Customer 2 UK

Business Manager Customer 3 China

Database Manager Telecommunication


FIGURE 3.1 Example of possible cognizant matrix structure. Source: Adapted from “The Issue: For Cognizant, Two’s Company,” Businessweek (January 17, 2008), http://www.bloomberg. com/bw/stories/2008‐01‐17/the‐issue‐for‐cognizant‐twos‐companybusinessweek‐business‐news‐stock‐market‐and‐financial‐advice (accessed August 20, 2015).

1 “Reinvented Blog by Prashanth Rai” (March 19, 2008), http://cio‐reinvented.typepad.com/cioreinvented/2008/03/tcs—new‐organ.html (accessed December 19, 2011). 2 N. Shivapriya, “TCS CEO N Chandrasekaran Creates New Layer to Oversee Verticals” (May 25, 2011), http://articles.economictimes.indiatimes. com/2011‐05‐25/news/29581999_1_tcs‐ceo‐n‐chandrasekaran‐tcs‐spokesperson‐structure (accessed December 19, 2011).

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57 Organizational Strategy and Information Systems

Cognizant and TCS are both in the same business but chose different organizational structures to carry out their objectives. The point is that different organizational structures reflect different organizational strategies that are used to implement business strategies and accomplish organizational goals. These organizational strat- egies need to be aligned with IS strategies. When used appropriately, IS leverage human resources, capital, and materials to create an organization that optimizes performance. Companies that design organizational strategy without considering IS strategies run into problems like those Cognizant experienced. A synergy results from designing organizations with IS strategy in mind—a synergy that cannot be achieved when IS strategy is just added on.

Chapter 1 introduced a simple framework for understanding the role of IS in organizations. The Information Systems Strategy Triangle relates business strategy with IS strategy and organizational strategy. In an organization that operates successfully, an overriding business strategy drives both organizational strategy and information strat- egy. The most effective businesses optimize the interrelationships between the organization and its IS, maximizing efficiency and productivity.

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