Six Critical Success Factors for Centralizing IT

Centralized Information Technology (IT) advocates are currently beating decentralized IT advocates.

The Bottom Line: Smart companies are finding a balance between the cost and productivity benefits of centralization and the agility and customer responsiveness of decentralization.

What It Means: We have identified the following six factors in project planning that will define the success of projects to centralize the IT function:

• Centralization-localization selection--In some areas, local support will always be necessary, and certain applications should remain out in the field. Finding the right balance between what gets centralized and what remains decentralized is critical to optimizing cost and customer satisfaction.
• Rigorous standards--Develop consistent architectural, application, and process standards to reduce the variability of the infrastructure. This is where much of the cost savings comes from.
• Portfolio management--Evaluate the entire portfolio of IT projects to match business priorities and minimize risk. This will also help identify and eliminate redundant and non-strategic projects.
• Process maturity--Define and measure processes with clear accountability. Delivering consistent support across a global organization is impossible without solid processes.
• Service-level management--Use formal service levels to ensure consistent quality. SLAs become your barometers for performance and mechanisms for identifying improvement opportunities.
• Cost transparency--Accurate and timely measurement and reporting of the cost of IT service delivery is vital. A good understanding of cost makes charge-backs (always a contentious issue) equitable and easier to defend.

Conclusion: Of course, a strong communication plan and executive support are also critical to success, but they are often the first challenges that get addressed. Including these six items into your planning will help make the difference between a temporary shift of the IT pendulum and a permanent placement that delivers sustainable competitive advantage.

AMR Research originally published this article on 25 February 2004.