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Balancing Lopsided IT Governance

by Chris Curran on November 15, 2011 [email] [twitter]

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It’s happening again. Corporations are decentralizing IT and calling the role of the CIO into question.

Between social networking, cloud computing and digital mobility, business units are demanding more than ever from IT. IT is struggling to keep pace with rapid innovation and business units are growing increasingly comfortable purchasing and deploying outside systems on their own. Conditions are ripe for restructuring the relationship between business and IT.

According to a PwC white paper, “Why Fixing the Business/IT Divide Now is the Key to Survival,” the financial services industry is following the lead of several large investment banks and is breaking up their IT departments and dispersing talent throughout individual business units to speed the rollout of new products and services. In extreme cases, companies have even removed the CIO or replaced it with an executive responsible for “tech and ops.”

Complete decentralization without a CIO is a lopsided approach to IT governance. To effectively align business and technology to drive innovation, mitigate risk and manage costs, companies need to strike the right balance between centralization and decentralization.

Too little centralization breeds redundancy and complex IT environments that give rise to risk and unclear responsibilities and objectives. This costs time and money. On the flipside, too many restrictions from command-and-control can stifle innovation and speed and prompt business units to seek outside help without involving IT at all.

As C-Suite executives reassess and re-balance the power between business and IT, they shouldn’t waste their time questioning the value of their CIO, as long as they recognize the dual roles of the CIO. The CIO is the linchpin of effective business/IT alignment. In this next iteration of decentralization, CIOs should select vendors, set standards and drive decisions about what is decentralized and what is not – all linked to the objectives and capabilities driven by the business. In short, they should be empowered, not eliminated.

What do you think? Should we finally put an end to the costly centralization/decentralization cycle and maintain a balance between the two extremes?

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  • http://twitter.com/ciodashboard Chris Curran

    [Comment from Discussion on LinkedIn Premier 100 group] By Ferdinand Velasco M.D.-CMIO, Texas Health Resources…That’s a pretty
    radical shift. Where’s the balance in doing away with IT governance
    altogether? I don’t envision organizations eliminating the CFO and
    decentralizing Finance. I suspect the same drivers would apply to
    maintain IT stability within large, complex companies.

  • http://twitter.com/ciodashboard Chris Curran

    [Comment from discussion on LinkedIn Premier 100 group] by Steve Porter-CIO, Touchstone Behavioral Health…This pendulum will
    continue to swing between the two poles just as the economy continues to
    shift. We’ve seen this play out before, with the extreme being a move
    to completely outsource IT operations. If we remember that no one else
    in the enterprise truly understands the complexity of the underlying
    technology it becomes easy to see why IT is such a ready target for
    ‘optimization’. As CIOs it becomes even more imperative that we continue
    to provide a clear understanding – using business and financial terms –
    of the value our teams bring. Naturally, the dichotomy of our role
    dictates that we also analyze and anticipate the needs of the
    organization in order to supply timely guidance.

  • http://twitter.com/ciodashboard Chris Curran

    [Comment from discussion on LinkedIn CIO Summit Leadership Development Program group] by Kenneth Bainey-CIO, Gov’t of Alberta Ministiry of Infrastructure & Transportation…You
    need to get to a more evidence-based method of communicating-the
    multiplier effects of mis-communications or communications from a
    limited context can be “ten-fold”. so you can imagine the negative
    impact.

    1 or may be 2% of CIOs from the banking industry may be replacing their
    CIO role/position with CIO/OPS role/position. However, this may be a
    situation where the the culture needs to change–definitely not the the
    new IT paradigm. If you want to stir controversy and create an
    innovative idea-great; but do so with some credibility enidence-based
    sources.

    The 3 forces of economic growth in the market economy are: People;
    Materials/Infrastructure and Innovations, and IT is a major enabler for
    Innovations-hence the more need for competent CIOs with technical,
    business knowledge and skills to make innovative decisions. Technical or
    Expert-Level decision making. Cannot understand how decisios can be
    analyzed, made or assessed by non-technical people, especiallly in a
    dynamically changing industry as Information Technology.

    Yes-We live in a self-serving market economy but the greatest elements
    of influential and knowledgeable technical leaders are-Vision, passion
    and integrity.

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