The clear advantage of the federated model is that it moves IT much closer to business. Making the divisional CIO part of the line of business (LOB) management team and having divisions fund initiatives strengthens business alignment and ownership of business-specific applications.

But as CIO-at-large Hemant Kogekar notes, while the business link is strengthened under the federated model, the IT link becomes weaker. Kogekar, who has held a number of high-profile CIO roles, says that advancing architecture across an organization becomes much harder as it inevitably takes a back seat to more immediate LOB priorities. The collaboration and compromise required to agree on common systems deteriorates.

"I have been in organizations where although LOBs agreed on the need for common systems, they could not agree on funding and timing of the investment. Thus the division with the highest need tends to implement a solution that just fits their needs," Kogekar says.

"My experience with propagating architecture is that it needs a great deal of persuasion and goodwill at various levels, from executives to designers to technicians, to encourage them to do things differently, whether components or standards or messaging. Thus to get momentum for these initiatives becomes an uphill battle. In centralized IT structures the CIO can provide seed funding and direct the troops to move in a new direction."

Kogekar says the federated model will only work with strong buy-in to the principles of collaboration and synergies as well as "sacrifice for the greater good". This commitment has to be from the very top and tested regularly. Otherwise, he says, in a few years time the pendulum will inevitably swing back to centralized structure.

"The federated model gives good balance between enterprise and local innovation," says SMS Management & Technology senior consultant Grant Cause. "It is also quite effective at aligning IT with the needs of the business. The disadvantages of the federated model are the complexity of coordinating among so many players, the problem of dual reporting relationships and, most importantly, the high administrative and staff costs of supporting multiple IT organizations."

"In general, the federated model is an optimal model for ensuring that all players have a sense of control," agrees Cause's colleague David Cliff. "It is different from a dispersed model where there is no 'core'. However, the more an organization seeks to encourage local IT decision making with some kind of consensus-based standards approach, the more difficulty it runs into, hence models need to cede certain controls to a central group in order for the organization to achieve efficiency in their IT delivery."

Marcus Batten, consultant and non-executive advisory board member at ewinbiz, warns the IT infrastructure needs to be geared and set up as a tool to move with the business needs and directions and should not in any way create extra work to serve its own purpose or systems. "I believe that we cannot achieve an effective IT infrastructure, federated or otherwise, unless we really know the business," he says.

"We need to describe and understand the needs and activities of the business and the characteristics. We then have a clear perception about where proper organization, and the proper focus of attention and resources in the most effective ways, can add value to a business or team. It still appears that the modular IT organization, with its use of appropriate models for each IT activity, is the most cost effective way to achieve our goals," Batten says.

While many will argue that this is more or less the way IT is always organized, Batten says the reality is that departmental or group infighting, fuelled sometimes by ego and other times by simple misunderstanding, often contributes to a fear of change that keeps business from completely realizing this vision.

For example, many companies persist in performing basic service provisioning (such as provisioning desktop computers and LAN administration) instead of turning that function over to a service provider. "It is doubtful whether any group is going to founder based on what brand of machines they use or what version of Windows or Linux is installed," Batten says. "A fair amount of corporate expenditure is on those very issues instead of value innovation or solution delivery — two areas that would add immense value to the business leaders."

And he says apart from the two functions that every IT organization in every business must perform in order to meet business objectives — the value contribution of innovation and financial management — every IT function could be outsourced.

A business manager needs to be able to see what is going on in his or her business and needs to be able to communicate in whatever way necessary to be able to fight from day to day. The IT solution needs to directly add value to their activities without creating road blocks or adding workload.

"Some business may benefit by a completely federated model, some may need a mixture of federated and modular and some may need a modular solution. The real flexible solution is more geared towards business services management and then working out the correct infrastructure model that will deliver the best business outcomes. What you don't want is a system that entails a massive relearning and retraining program for the team," Batten says.