Managing Information Technology

538 Part IV • The Information Management System

Centralized Decentralized Federal Customized

Operations

-Infrastructure Planning

-Computer Operations

-Telecom/Network

Operations

-Help Desk

-Desktop Support

Applications

-Application Planning

-New System

Development

-Legacy System

Maintenance

-End-User Development

Support

CDCC or D

CDDC or D

C = Centralized decision making and accountability for IT resources

D = Decentralized decision making and accountability for IT resources

FIGURE 13.2 Four Common IS Governance Designs

business units control over their own applications by decen-
tralizing the governance of these IS resources. A more
customizedhybrid design is found especially in large, multi-
divisional firms in which some business divisions choose to
have a centralized IS unit handle all of their IT needs, while
other divisions choose to have a federal or decentralized
design in order to have more local control of their own IT
resources, which might even include having their own IS
staff running their own computers. Customized designs are
also common in companies that have acquired other firms,
and then allow them to continue to operate as autonomous
business units or subsidiaries.
Some organizations with centralized designs may
also operate as a “business within a business” where the IS
unit is treated much like an external vendor, with separate
cost and revenue accounting, and an agreed-upon transfer
pricing scheme. Some senior business managers believe
that this is the best way to hold both the IS and business
units accountable for IT costs for both IT service delivery
and new IT applications. In large organizations, a common
approach is to also combine the IS organization with other
functional support organizations (e.g., human resources,
legal, physical facilities maintenance, transportation) into a
shared servicesunit, which may or may not be created as
a separate legal entity. Shared services organizations dedi-
cated to different world regions may also be set up to sup-
port large multinationals, and sometimes these regional
units even compete with each other. (See the box “Shared
Services at a Multinational Firm.”)

How does a firm choose among these IS governance designs?

A firm’s IS governance design needs to be aligned with char-

acteristics of the overall business. If a company is relatively

small, a centralized IS design is most likely. If a company is

large and has multiple business units, and the heads of these

business units operate with a high degree of autonomy, then a

federal or decentralized design may be a better choice. If

some business leaders within a large firm are reluctant to be

responsible for governing IS resources, then a custom design

may be adopted to accommodate business unit preferences.

MANAGING IT SERVICE DELIVERY

The physical technology assets of an organization (e.g., its

computer hardware, software, telecommunications and

data networks) have always represented a very large capi-

tal investment. Although hardware costs have decreased

even as their capabilities have increased, organizational

demands for computing processing power, data storage,

and communications speed and user demands for desktop

PCs, laptops, and other portable devices have also

increased. From a businessperspective, these technology

assets are used to deliver a service—such as access to an

enterprise system screen for entering order information or

a printer connected to a local area network.

Today, employees at all levels in the organization, at

multiple locations, typically interact with the computer

network for essential aspects of their work. Thus, network

or computer failure now has a high degree of visibility—it