In a world of accelerating digital transformation, the question of IT organization within companies remains crucial. Should all IT resources be centralized under the aegis of the IT department, or decentralized to foster agility and innovation? Having worked in a wide variety of organizations over the last few years, I have observed a number of different models and their impact on overall organizational performance. This article explores the advantages and disadvantages of each approach, and proposes a middle way that can be adapted to suit different contexts.

The benefits of IT centralization by the IT Department

Strategic coherence and governance

Centralizing IT resources under a single CIO ensures strong alignment between digital strategy and the company’s business objectives. In this model, the CIO can have an overall vision of technological initiatives and guarantee their coherence.

This unified governance also makes it easier to prioritize projects according to their added value for the organization. Investments are thus directed towards the most strategic projects, rather than scattered over isolated initiatives with limited overall impact.

Economies of scale and cost optimization

One of the strongest arguments in favor of centralization is the economies of scale it brings. Pooling human resources, infrastructure and software licenses generates substantial savings.

A centralized IT department also has greater negotiating power when dealing with suppliers. Framework contracts and group purchasing can help to secure more advantageous pricing conditions. In addition, reducing technological duplication limits the hidden costs that can quickly accumulate in a decentralized environment.

Standardization and enhanced safety

Standardization of equipment, software and processes greatly simplifies maintenance and support. Security updates can be deployed uniformly, reducing the attack surface.

In terms of cybersecurity, a centralized approach enables consistent controls and unified monitoring. Compliance with various regulations (RGPD, industry standards) is also facilitated thanks to a homogeneous security policy and standardized control processes.

The disadvantages of excessive centralization

Rigidity and operational slowness

The downside of extreme centralization is often a degree of red tape. Decision-making processes are lengthened, with multiple approvals slowing down project implementation.

This bureaucratization can create a gap between business needs, which are often urgent, and the IT department’s ability to respond rapidly. Businesses are then faced with a dilemma: wait for the deadlines imposed by the IT department, or find alternative solutions.

De-motivation and bypassing

The frustration engendered by these delays and constraints frequently leads to the emergence of “shadow IT” – solutions deployed by the business without the approval of the IT department. This phenomenon, far from being anecdotal, is both a symptom of the malfunctioning of the centralized model and a major risk for the company.

On the other hand, the constraints imposed by an overly centralized IT department can hamper innovation and discourage creative talent. In a context of war for talent, IT governance perceived as too rigid becomes a handicap in attracting and retaining the best technical profiles.

Unsuitable for certain organizational structures

Not all organizations lend themselves to strong IT centralization. Highly diversified companies with specific business needs, or international groups operating in heterogeneous markets, can suffer from an overly uniform model.

Similarly, organizations that have developed a culture of autonomy and team empowerment may find their values at odds with a centralizing approach.

Towards a hybrid and contextual approach

The federated model: centralizing what makes sense

Between these two extremes, the federated model offers an interesting balance. It is based on a distinction between what is “common” and what may be trade-specific.

In this model, infrastructure, security and cross-functional services remain under the direct control of the central IT department. On the other hand, business applications and innovative initiatives can be developed on a more decentralized basis, within a collectively defined framework and standards.

Governance then becomes collaborative, with committees on which both the IT department and the various business departments are represented.

Adaptation according to organization type

There is no one-size-fits-all solution, and the optimum degree of centralization varies according to a number of factors:

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  For large multinational companies, a model with regional hubs coordinated by a central IT department may offer the best compromise between global coherence and local adaptation.

  
  
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  SMEs may opt for more pronounced centralization, but with close proximity to their businesses to guarantee responsiveness and relevant solutions.

  
  
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  Start-ups and scale-ups generally benefit from a more decentralized approach, with a minimum base of common standards to avoid excessive fragmentation as they grow.

  
  

Key success factors for a hybrid model

The success of a hybrid approach rests on several pillars:

• Transparent, regular communication between IT and business departments
• Involving end-users in defining needs and selecting solutions
• The introduction of performance indicators that focus as much on user satisfaction as on technical efficiency
• Periodic review of the governance model to adapt it to changes in the organization

Case studies and feedback

The case of excessive centralization in the public sector

I had the opportunity to work with a public sector organization where IT centralization was pushed to the extreme. The IT department controlled all aspects of technology, from infrastructure to business applications.

This hypercentralization was partly justified by strict regulatory requirements and a limited IT budget. However, the consequences were visible on a daily basis:

• Extremely long lead times for new projects, with validation cycles that can exceed 18 months
• A palpable frustration on the part of business managers, who felt misunderstood and constrained in their digital transformation.
• A CIO perceived as a hindrance rather than a partner in innovation
• Gradual disengagement of users, who were content with the functional minimum

The situation began to change for the better when the IT Department set up dedicated “business partners” for each department. These hybrid profiles, understanding both technical and business issues, acted as translators and facilitated the emergence of more appropriate solutions. Without calling into question the centralization of infrastructure and security, this evolution has enabled us to recreate links and trust.

The example of anarchic decentralization in an engineering company

At the opposite end of the spectrum, I worked with an engineering company where each department, essentially made up of IT specialists, developed its own specific tools. This extreme decentralization was justified by the technical expertise of the teams and the highly specialized needs of each project.

The result: a proliferation of redundant applications, major interoperability problems, and considerable hidden costs:

• A large number of applications developed in-house, sometimes with similar functionalities
• Inability to share information effectively between departments
• Difficulties in maintaining solutions developed by employees who have left the company
• Security holes discovered late in some critical applications

The transformation began with a complete audit of the company’s application assets and the creation of an IT “Center of Excellence”. This center, made up of representatives from each department and the IT Department, defined a common technological base and shared development standards.

Without imposing brutal centralization, this approach gradually rationalized the application landscape while preserving the creative autonomy of the teams. It goes without saying that such a project is necessarily a long-term one.

Conclusion

At a time when IT is no longer a mere cost center, but a driver of transformation and innovation, the question of its governance is becoming strategic. Between excessive centralization, which risks stifling agility, and anarchic decentralization, a source of dispersion, the path to wisdom seems to lie in a hybrid, contextual approach.

The role of the modern CIO is thus evolving towards that of an orchestrator, capable of defining a common framework while supporting business initiatives. This position requires both a clear strategic vision and the ability to adapt to the specific needs of each organization.

Tomorrow’s IT department will be neither an ivory tower nor a mere support function, but a strategic partner to the business, capable of reconciling standardization and innovation, security and agility, global coherence and local relevance.