I will have to agree as well. I would prefer the matrix organization as it also allows for greater flexibility in terms of outsourcing. In my experience, some projects that can be done outside the company are easily contracted and the outsource personnel are expected to support whole functional areas. However, I must also add that in this structure, employees may have to report to two bosses, which adds confusion and may cause conflict. This usually happens in a balanced matrix organization where both bosses have equal authority and power. In order to mediate this, roles and responsibilities must be clearly documented and communicated to employees to avoid confusion.