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What Is the Typical Organizational Structure of a Software Company?

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  • Written By: D. Nelson
  • Edited By: M. C. Hughes
  • Last Modified Date: 08 September 2016
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An organizational structure is a model of the way a business is managed and work is distributed. The typical organizational structure of a software company depends largely on its size. Smaller companies with one or two locations and limited volumes of transactions might not require complex structures. A president or Chief Executive Officer (CEO) may instead distribute tasks among several people. The structure of a company that sells a variety of products and which may have business interests in different parts of the world, however, normally requires a CEO to oversee more complex substructures.

A CEO normally answers to a board of directors that approves decisions regarding a company's organizational changes. It is common in larger organizations for a CEO to work with a Chief Operating Officer (COO). In most cases, these executives oversee three different facets of a software company: software development, finance, and marketing. An executive normally oversees each of these functions.

The organizational structure might differ when a software company has multiple geographic locations. Instead of dividing an organization into its primary functions, a plan might delegate to each location responsibility for its own finance, production, and marketing. In these cases, coordinators or COOs usually ensure that each location upholds corporate standards and works to meet corporate goals.

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Software development functions are vital to a software company. Development often requires its own complex organizational structure. For example, a development group should have project managers that are designated by a Chief Technology Officer (CTO). Testers, programmers, and engineers all play important roles in software development.

The organizational structure of a software company should also include information regarding workflow and communication. A marketing department needs to communicate with software development to ensure that projects are meeting the expectations of clients. Computer networks have become an important part of any organizational structure.

As a company grows, its organizational structure should change. For this reason, a structure is often thought to be in a state of continual improvement. It is common for an executive to analyze processes in real time and change how work is distributed to improve processes. Software companies tend to be client driven, so it also is common for executives to change marketing to meet the needs of new products or interests.

When mergers and acquisitions occur, organizational structure also should adapt. Expansion also can cause work and responsibility to be delegated in different ways. It is common for the structure to include steps that should be taken in the case of unforeseen events, such as environmental hazards.

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croydon
Post 3

In my experience software companies can be fairly eccentric in the way they organize themselves. I suspect it's because they are often founded by people who know a lot about programming, but not very much about business.

Which is not to say that they are always badly organized, but I would definitely take a close look at how they do things before accepting a job with any company.

irontoenail
Post 2

@KoiwiGal - I would argue that even the smallest company should have some kind of organizational structure for business, or they will soon be overwhelmed.

Even if there is only one person doing everything, he or she is still going to have to organize their own time and the order in which jobs are done. I imagine very few programs are truly done with only a single person's input, however. If nothing else, beta testers are going to be involved, and there are likely going to be different freelancers doing things like icons and so forth as well.

All of this needs to be coordinated. The person who doesn't figure out in advance how that's all going to work isn't going to last very long in business.

KoiwiGal
Post 1

I think the interesting thing about software companies is that they might not really have a business organizational structure at all. Quite a few of them only have a handful, or even just one person in the company, since it doesn't take very much to make and release some kinds of programs.

This is particularly true of phone and tablet apps.

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