With cloud computing and the consumerization of IT empowering technology purchases, enterprises are moving away from IT control. But emerging management challenges and inefficiencies may force IT teams to grab for the reins again.
"There has always been a tension between IT and the business units," said Harwell Thrasher, founder of MakingITClear Inc., an IT management consultancy. "And it has played itself out in movement toward or away from central IT control."
When new technologies -- for example, smartphones -- emerge, the push and pull between centralization and decentralization intensifies. And three trends -- the consumerization of IT, the popularity of big data and the advent of cloud computing -- make decentralization more appealing.
With the consumerization of IT, technology purchases are now within reach of end users. Employees use personal smartphones and tablets to access corporate data. Big data is pushing data analytics down to the department layer, where executives sift through oodles of information. Cloud computing is enabling line managers to deploy computer resources in a matter of minutes, without involving the IT team.
As departmental purchases increase, data center managers' input on technology spending decreases. A recent Gartner survey shows that chief marketing officers now have as much technology purchasing power as IT managers.
IT departments are partly to blame for this change.
"Business units sometimes think data center managers are slow to deliver new technology when it is needed," said Thrasher. With cloud-based services, a department can have the resource up and running quickly, with just a few mouse clicks. Previously, obtaining a server from IT often would have taken months.
Responsiveness has become a key driver in new technology purchases. "Business units would rather pay more for a service that is delivered quickly than wait weeks or months and save money," said Wayne Pauley, senior analyst at Enterprise Strategy Group Inc.
Many companies believe getting the new service up as fast as possible creates new opportunities, so the company eventually will recoup additional expenses. If the company waits, those opportunities may dry up or land in a competitor's lap.
Centralized IT vs. decentralized: Where are the benefits?
This decentralization of IT trend may be temporary; other factors may swing the pendulum back -- giving power back to the data center manager. Companies in financial services and health care markets, for example, may centralize operations to meet compliance requirements under the Health Insurance Portability and Accountability Act and the Sarbanes-Oxley Act.
A distributed approach to IT drives up data processing costs. Centralization consolidates a number of autonomous department servers onto a larger system. Replacing smaller, specialized systems reduces an organization's technology footprint. Virtualization allows companies to collapse their processing tasks onto fewer systems, lowering storage, networks, power use and cooling costs.
Centralization also cuts hardware and software licensing costs; spreading systems out to more departments leads to more system and software purchases. In addition, the business may not realize discounts based on its overall spending because contracts are signed at the department level rather than the corporate level. A departmental $1 million purchase may have a 3% discount, while a company-wide, $2-million expenditure has a 4% discount.
Centralized IT can also improve staffing. Centralizing functions, such as help desk, disaster recovery and email reduces overall IT costs and complexity. Additional benefits include traveling less, having fewer shipping locations, simplifying training costs and eliminating redundant staff positions, processes and systems.
Maintenance is also easier with centralization. Various departments don't always have the skills to support their own systems; their technology knowledge is broad, not deep. A line manager's lack of technology knowledge can keep business units from efficiently and successfully deploying sophisticated IT features, such as a big data analytics application.
Glenn Gonzalez, senior infrastructure architect manager at a cruise line, oversaw a centralization project at his former employer two years ago. "The company let all the departments do their own thing," Gonzalez explained. Consequently, each business unit had its data center hardware, point-of-sale system, storage and ERP software. Consolidating these resources using centralization reduced the time to deliver new services and significantly cut IT expenses.
Still, the centralization vs. decentralization debate remains. On the one hand, signs of movement to decentralization are evident. "With the consumerization of technology, IT departments are losing purchasing power and influence," Pauley said. However, this change may be temporary. The inefficiencies and costs of decentralization could push companies back to the central model.
About the author:
Paul Korzeniowski is a freelance writer who specializes in data center issues. He has been writing about technology for two decades, is based in Sudbury, Mass., and can be reached at email@example.com.
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