IT Organization Management: To Centralize or Not to Centralize?

GETTING I.T. STAFFERS TO UNDERSTAND and appreciate the business they serve has been a vexing problem for years. CIOs knock themselves out trying to overcome the mental block that somehow prevents IT professionals from grasping the products, processes and customers of the organization that employs them. Now a trend is emerging that could make this task even harder?the move toward centralization of IT staff in so-called centers of excellence (see “Next Stop: Centralization,” Page 98).

More and more companies are pulling IT staff out of the business unit where they’ve been assigned, and placing them in specialized business process or skill set groupings, to be called out to serve on project teams wherever needed in the enterprise. Think about the 1950s clichŽ of ladies in the office typing pool. Need a typing specialist for the month? We’ll send Jane right over.

This organizational model is supposed to increase the efficiency of projects. The problem is, nobody in any centralized IT pool is going to understand the business group they serve nearly as well as if they were permanently part of that unit.

Advocates of this model take comfort in the fact that project teams are staffed with both business and IT representatives, who will presumably work shoulder to shoulder and rub off on each other. More likely they will rub each other the wrong way. These people have a hard time communicating as it is; now we expect them to sync up without the benefit of having worked together over time.

Put the question to the CIO’s colleagues?the business unit and department heads. Whom do they think would be more valuable: A, the IT person who is part of their division and knows their processes and customers; or B, the technology specialist lent by the IT department to work on their project? You had better believe they’ll choose A.

And what do CIOs want? Centralization might seem like the prudent thing to do in hard economic times. It can reduce your burden of ensuring best practice sharing. But will it really save money? According to the longtime CIO author of this month’s CIO Confidential article (Page 150), “The pressure to recentralize as a means to eliminate redundancy is absolute nonsense because for every dollar saved, $2 will be spent (secretly) in uncoordinated, nonstandard, unsupportable IT efforts in the field.” And if you go this route, you may as well say good-bye to any chance of your staff’s truly understanding your business. You can also forget about fostering loyalty to the profit-and-loss teams that make up the core of your company. To me, this center of excellence model is tantamount to throwing in the towel.