- There is increasing demand to optimize the structures of IT departments to deliver tangible business value in an increasingly dynamic business environment. Traditionally, rapid changes in business demands would have required a decentralized IT operating model with IT resources closer to the changing environment for early anticipation, and to accommodate change more readily.
- However, alignment between the business and IT operating models may not provide the most appropriate outcome.
- While business units may require decentralized decision making to respond to the rapid changes in their environment, the IT function that may be best suited to support the business in these conditions is a more centralized approach.
- The right IT organization for a dynamic environment is the one that fosters the greatest collaboration with the business.
- The demand for integration across business units is driving increasing levels of standardization, formalization, and centralization of IT.
- IT is most successful:
- Under a hybrid operating model.
- When the business decides which IT services are needed and an IT steering committee decides how the services should be delivered.
- When systems are standardized.
Impact and Result
- IT operating models do not necessarily align to their firm’s business model. Rapid changes in the business environment demand greater integration of business units, which in turn, requires more standardization, formalization, and centralization of IT. Hybrid IT models can respond to these demands more effectively than other models.
- Info-Tech’s research suggests that there are several key business factors that drive greater centralization of IT. The main ones are reducing IT costs, improving IT services, and increasing the availability of skilled resources.
- Firms with hybrid IT operating models were more likely to report that IT is successful than were firms with either decentralized or centralized IT operating models.