"For many organizations, a federated model has proved to be an effective compromise between these two ends of the spectrum, with a central function responsible for overall IT coordination and governance, whilst maintaining either a direct IT capability in each business unit, or a business unit IT liaison to represent the IT requirements of that department within the central function."
Datamonitor's benchmarking shows that those organizations most effectively using IT tend to have a more highly centralized approach to IT governance and decision making, particularly when it comes to overall IT strategy decisions and infrastructure policy. That centralized approach helps strategic decision making by fostering a closer relationship between senior IT executives and senior business leaders — important when it comes to ensuring IT concentrates on projects that are well aligned with business objectives.
It is also easier to achieve good IT governance under central control, even if operational IT is distributed. ("It becomes easier to define a governance framework and the associated policies and operational processes, and to mandate these across the IT function. This does not mean that a distributed IT model necessarily leads to poor governance, but indicates that developing individual governance efforts across business units is less effective, and can be difficult to standardize at a later stage," the authors say.)
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