Hierarchical relationship between Systems Manager and Organizations

Hi,

AWS Organizations and AWS Systems Manager are two separate services in AWS, and they serve different purposes.
Systems Manager [1] is a collection of capabilities that helps you automate management tasks across your AWS resources.
Organizations [2], on the other hand, is a service that enables you to consolidate multiple AWS accounts into an organization that you create and centrally manage.

In your use case, you would typically use AWS Organizations to structure your accounts into OUs and apply policies to those OUs.
AWS Systems Manager would then be used within each AWS account to manage the resources and instances specific to that account.
Additionally, you can use the Organization's management account to perform administrative actions, or, if you want to use one account as a "Delegated Administrator" for the Systems Manager to manage resources across your organization, you can do that as well [3].

References:
[1] https://docs.aws.amazon.com/systems-manager/latest/userguide/what-is-systems-manager.html
[2] https://docs.aws.amazon.com/organizations/latest/userguide/orgs_introduction.html
[3] https://docs.aws.amazon.com/organizations/latest/userguide/services-that-can-integrate-ssm.html

Please let me know if this makes it clear.

Thanks,
Atul