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Recentralizing IT
Large companies face a quandary in managing their IT infrastructure—the hardware, operating systems, and networks that account for 40 to 60 percent of their total IT costs. They know that a centralized IT infrastructure serving all of a company's business units delivers huge economies of scale and higher performance but can be inflexible and unresponsive to local needs. Yet a decentralized infrastructure, though more flexible, is not only 20 to 30 percent more expensive than a centralized one but also less reliable. Although decentralized models now prevail, the pendulum is swinging back toward centralized control. A new model of IT governance may capture the best of both worlds.
The take-away: To capture the efficiencies of consolidation while providing for flexibility and accountability, IT managers should prepare a menu of available products, with clearly specified costs and service levels. Business managers can select the products and services they need—and are willing to pay for.
Articles provided by The McKinsey Quarterly
© 1992-2003 McKinsey & Company, Inc
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