What does the customer think of our internal battles?
What does the customer think of our internal battles?

An Enlightened Approach for the Central vs. Decentral IT Debate

Summary: Making the organizational design decision for where digital resources are deployed? Do focus on where the impact is best aligned with your mission and objectives; don’t fixate on controlling resources.

Are you considering a decentralized IT model, where IT resources and decisions are pushed down to business units inside the corporation? This simplistic description masks a lot of detail, because terms like “resources”, “decisions”, and “business units” means different things to different people. But there are common threads in the discussions that lead up to this decision – and the options are not entirely black and white.

The decision to centralize or decentralize IT does not have to be a strictly binary choice between two bad scenarios – an authoritarian, top down culture of control (that stymies innovation) versus the “wild west” of no standards, no integrations, and no cost leverage (that impedes collaboration). There are pros and cons on both extremes – and like most decisions in business, the optimal truth is somewhere in the middle, a blend of the best ideas, coupled with a thoughtful effort to mitigate the inherent challenges to deliver positive results.

Resource Optimization

Typically, this conversation starts in organizations with a centralized IT function that struggles to keep up with quickly changing demands while maintaining their founding focus of systems reliability. The IT team is frustrated because they perceive cost has become the primary driver of investment priorities; it is fascinating to note how quickly IT conversations move to focus on cost control and bottom line topics. This is why the centralized model is preferred by IT – we can take advantage of our size to aggregate purchasing power and get better pricing.

There are strategic implications as well. Defining clear-cut standards for technology purchases and processes reduces complexity, enables predictability & reliability for core systems, facilitates integration of data and processes, and establishes an environment where collaboration and knowledge sharing can take place. Wouldn’t it be better to optimize resources for these core services, freeing up time and investment to drive the top line?

Point of Impact

So why do some folks call out for decentralization? The strategic view is a recognition of the power and value of your customers; a successful organization puts the customer at or near the center of their focus. In this world, the optimal organization moves decision-making power as close to the customer as possible – if your focus is on your customer, you need to be agile, responsive, and continuously develop processes that deliver the value right at the point of impact.

The more tactical view is a practical view – the organization needs or wants new things and better capabilities, but are frustrated at the costs (in time and attention, as well as $$); why can’t everything be as simple as downloading an app?

Searching for Best Practices

When contemplating a change of control for this critical function, the first step is to realize that there are many viewpoints. Do not assume that any one team has all the answers; keep an open mind, and look for the tradeoffs.

When the topic of decentralized IT is broached, the IT folks needs to fight the urge to assert control. You don’t have to see this as a challenge to your abilities; it’s a recognition that the status quo is limiting the business in some way. We can look at this as the start of a healthy conversation about the critical requirements of the business, the assumptions and risks of any decision, and a bit of discovery on best practices.

At the same time, people in the functional areas, product lines, and business units that wish to assert control and make their own decisions need to go into this with eyes wide open. Our perception of cost may need to change, since we may lose the leverage of the larger user base. And the amount of time and energy required to understand the options, implement the systems, and provide ongoing support may be a big surprise.

Impact, not Control

How to break the impasse? Look to examples from the outside – technical architecture can tell us a lot …

  • “Mobile first” strategies point to decentralization – specific, limited, focused tech at the point of impact
  • Cloud concepts point to centralization – hugely leveraged support of infrastructure, with tons of flexibility and agility for deployment and support
  • Open source tech and Agile process will lean towards decentralization, by empowering the end points to build bespoke solutions to address specific challenges

None of these examples are clear-cut – I could make a contrarian case for each …

  • “Mobile first” strategies point to centralization – delivering predictable results by defining a platform that all apps must comply with
  • Cloud concepts point to decentralization – providing smarter components but pushing responsibility for solution architecture out to the edge
  • Open source tech and Agile process only work when centralization concepts like standard work and strictly documented process enable distributed development

At the end of the day, the right choice is made by focusing on impact …

Aligned with our core objectives (Why) …
… we can design the best environment and methods (How)
… so we can deliver on our commitments to the Customer (What).

The alternative is to worry about control …

When I can direct the tasks and resources (What),
… I am better able to pick the methods (How)
… to deliver on my objectives (Why).

The latter is upside-down, the thought process is backwards; in so many disciplines, the mantra is always to focus on the objective, the problem we are trying to solve, the value we are trying to create. If we base our decisions on driving for the biggest impact, we will make better decisions on organization, process, and technology.

# 23 June, 2018

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James MacLennan

... is the Managing Partner at Maker Turtle LLC, a digital consultancy focused on creating value in ways that align with your strategy and drive engagement with employees, customers, and stakeholders. He is an active creator, providing thought leadership through on-line & print publications, and public speaking / keynotes.