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Governance the Key to Meaningful Federation

Governance the Key to Meaningful Federation

Whatever its merits in theory, a federated model can never be an effective compromise between the centralized and distributed models of IT unless the governance is right

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The data also suggests decisions affecting IT infrastructure are considerably more effective when centrally made, because they encourage increased standardization, reduced supplier proliferation and better infrastructure use.

For all those reasons Butler Group recommends overall responsibility for IT governance should lie with a group CIO who enjoys autonomy from individual business units and who is charged with developing an enterprise-wide standard framework for governance. This framework should specifically mandate a joint business-IT approach to IT strategy decisions, should involve business units in decisions on enterprise applications, and endorse a common enterprise architecture across the organization. For routine run the business (RTB) strategies, they say the organization should focus on standardization and the definition of IT services that are decoupled from business units and can be delivered at the lowest possible cost consistent with efficient operations.

"The sponsorship, management and governance of strategic enterprise-wide programs in federated organizations require dedicated centralized resources," researcher Forrester says. "These resources must be free from day-to-day involvement in operational deliverables so they can be committed to strategic activities. And they must be positioned organizationally so their influence extends enterprise-wide. The office of the CIO (OCIO) is such a structure. Its primary function is to advance a strategic IT management agenda within a federated organization."

Forrester notes that federated organizations are optimized for the autonomy of the operating units and are ill-suited to coordination of enterprise-wide planning or the execution of enterprise-wide initiatives. Having operational resources reside within and funded by the business units, which expect to derive direct business value from deployment of their resources, makes it impossible to advance an enterprise-wide agenda without the addition of central organizational structures and processes. The typical structure for governing the enterprise-wide IT management agenda is the office of the CIO.

(See "When Egos Dare")

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