When undertaking
infrastructure
centralization, be careful
to fully understand and
preempt any negative
impact of centralized
infrastructure downtime
on service quality or
enterprise productivity.
A Step-by-Step Guide to IT Centralization
CENTRALIZATION ARCHETYPE 1:
INFRASTRUCTURE CENTRALIZATION
KEY BENEFITS
■■
■■
Creation of a common infrastructure
platform for applications
Increased consistency and availability of
infrastructure services across the enterprise
■■
Upgrade of available infrastructure assets
■■
Infrastructure staff headcount reduction
■■
MAJOR DRAWBACKS
■■
■■
■■
Economies of scale from greater volume
■■
Infrastructure staff skill pooling
SUITABLE IF YOU…
■■
Support an agility-focused business strategy
■■
Are planning further centralization
■■
Want to test central IT service delivery
■■
CIO EXECUTIVE BOARD™
IT PRACTICE
www.cio.executiveboard.com
© 2009 The Corporate Executive Board Company.
All Rights Reserved. CIO4991209SYN
Increased complexity of capacity planning
resulting from multiple sources of demand
Potential enterprise-wide impact of service
problems or outages
Infrastructure equipment, license,
and facilities consolidation
■■
■■
Inability or increased cost of supporting
legacy applications
NOT SUITABLE IF YOU…
■■
Support business units with significantly
different infrastructure service-level and
capacity needs
Want to improve and harmonize
infrastructure processes and service levels
before outsourcing
Need to increase consistency
of infrastructure service provision
ALIGN THE DEGREE OF IT
CENTRALIZATION WITH
ENTERPRISE NEEDS
EVALUATE POTENTIAL
CENTRALIZATION OPTIONS
UNDERSTAND
GOVERNANCE
REQUIREMENTS
MAKE THE BUSINESS CASE
FOR CENTRALIZATION
12
Infrastructure shared
services are typically
the first step in IT
centralization initiatives
because business
partners tend to be least
attached to infrastructure
services.
■■
■■
If done effectively,
infrastructure shared
services provide a consistent
and powerful platform for
common enterprise and
business applications.
CENTRALIZATION ARCHETYPE 1:
INFRASTRUCTURE CENTRALIZATION (CONTINUED)
Common Delivery Model
Infrastructure Shared Services
Illustrative
Office of the CIO
■■
■■
■■
■■
■■
Enterprise Architecture
Information Risk
IT Finance
IT HR
PMO
Set up strong links between
the infrastructure shared
services group and business
unit applications teams
to ensure infrastructure
investments keep pace with
business unit application
needs.
CIO
Business Unit 1 IT
IT Governance
Infrastructure
Shared Services
■■
■■
■■
Strategic Planning,
Project Prioritization,
Budgeting
■■
■■
■■
■■
Data Operations
Server Support
Networking and Telecommunications
End-User Support
Infrastructure Planning
Vendor Management
Application
Development
Application
Maintenance
Service
Manager
■■
■■
Project Management
Manage infrastructure service.
Interface with the business
on infrastructure needs.
Vendor Management
See the IT Organizational
Charts Database for additional
information on IT organizational
models.
CIO EXECUTIVE BOARD™
IT PRACTICE
www.cio.executiveboard.com
© 2009 The Corporate Executive Board Company.
All Rights Reserved. CIO4991209SYN
Site-Based
Infrastructure
Support
ALIGN THE DEGREE OF IT
CENTRALIZATION WITH
ENTERPRISE NEEDS
EVALUATE POTENTIAL
CENTRALIZATION OPTIONS
UNDERSTAND
GOVERNANCE
REQUIREMENTS
MAKE THE BUSINESS CASE
FOR CENTRALIZATION
I. Determine the Right Degree of IT Centralization
13
When centralizing
enterprise applications,
take factors such as
regional differences in
compliance requirements
or business strategy into
consideration along with
variations in business unit
size and maturity.
■■
Design a financial relief
mechanism for small
business units that are
negatively impacted
by having to pay for
functionality they
do not need.
A Step-by-Step Guide to IT Centralization
CENTRALIZATION ARCHETYPE 2: INFRASTRUCTURE
AND ENTERPRISE APPLICATIONS CENTRALIZATION
KEY BENEFITS
MAJOR DRAWBACKS
■■
Infrastructure centralization benefits
■■
■■
Harmonization of core data
■■
■■
Streamlining of core processes
■■
Applications headcount reduction
■■
Technical skill pooling
■■
■■
Enterprise application portfolio
complexity reduction
■■
■■
Scale price breaks created by enterprise
licensing agreements
SUITABLE IF YOU…
■■
■■
■■
■■
■■
CIO EXECUTIVE BOARD™
IT PRACTICE
www.cio.executiveboard.com
© 2009 The Corporate Executive Board Company.
All Rights Reserved. CIO4991209SYN
Strive to capture efficiency improvements
from business-process standardization
and redesign
Wish to achieve a greater degree of data
harmonization to support business decisions
Infrastructure shared services drawbacks
Comprehensive functionality needed by
some business units is not fully leveraged
across the organization.
Common enterprise systems lead to smaller
business units having to pay for fully-loaded
services that they don’t need.
Data and process harmonization can require
major investments and involve major change.
NOT SUITABLE IF YOU…
■■
■■
Support business units with significantly
different levels of maturity and size
Support business units with recently
upgraded or diverse core applications
systems and processes
Support business units that have a similar
size and level of maturity
Can obtain significant cost savings from
enterprise-wide vendor licenses for core
applications
Will gain significant benefits from skill
pooling or from cost savings caused by
headcount reduction
ALIGN THE DEGREE OF IT
CENTRALIZATION WITH
ENTERPRISE NEEDS
EVALUATE POTENTIAL
CENTRALIZATION OPTIONS
UNDERSTAND
GOVERNANCE
REQUIREMENTS
MAKE THE BUSINESS CASE
FOR CENTRALIZATION
14
For most organizations,
a combination of
infrastructure and
enterprise applications
centralization provides
an optimal balance
of responsiveness,
scale economies, and
standardization.
CENTRALIZATION ARCHETYPE 2: INFRASTRUCTURE
AND ENTERPRISE APPLICATIONS CENTRALIZATION
(CONTINUED)
Common Delivery Models
Infrastructure and Enterprise Applications
Shared Services
Infrastructure Shared Services and Enterprise
Applications Centers of Excellence
Illustrative
Illustrative
■■
For Centers of Excellence
(CoE) to be effective,
organizations need to
structure a formal balance
between the services
the CoE provides to the
business unit with which it is
associated and the services
it provides to the enterprise
at large.
Office of the CIO
CIO
Office of the CIO
Architecture
■ Information Risk
■ IT Finance
■ IT HR
■ PMO
■
Business Liaisons
Business Unit IT
IT Governance
■
Enterprise
Applications
Shared
Services
Strategic Planning,
Project Prioritization,
Budgeting
Business
Application
Maintenance
Enterprise
Application
Development
or Procurement
■ Integration
and Configuration
■ Maintenance
and Enhancement
■ Vendor Management
■ End-User Support
IT Governance
Infrastructure
Shared
Services
■
■
■
■
■
■
■
Data Operations
Server Support
Networking and
Telecommunications
End-User Support
Infrastructure Planning
Vendor Management
© 2009 The Corporate Executive Board Company.
All Rights Reserved. CIO4991209SYN
Enterprise
Application
Center of
Excellence
■
■
■
■
Project
Management
CIO EXECUTIVE BOARD™
IT PRACTICE
www.cio.executiveboard.com
Business Liaisons
Business Unit IT
Business
Application
Development
See the IT Organizational
Charts Database for additional
information on IT organizational
models.
CIO
Enterprise
Enterprise Architecture
■ Information Risk
■ IT Finance
■ IT HR
■ PMO
■
■
Enterprise
Application
Development
or Procurement
Integration and
Configuration
Maintenance
and Enhancement
Vendor
Management
End-User Support
■■
Strategic Planning,
Project Prioritization,
Budgeting
Business
Application
Development
Business
Application
Maintenance
Vendor
Management
Site-Based
Infrastructure
Support
Site-Based
Infrastructure
Support
EVALUATE POTENTIAL
CENTRALIZATION OPTIONS
UNDERSTAND
GOVERNANCE
REQUIREMENTS
■
■
■
■
■
■
Data Operations
Server Support
Networking and
Telecommunications
End-User Support
Infrastructure Planning
Vendor Management
Project
Management
Vendor
Management
ALIGN THE DEGREE OF IT
CENTRALIZATION WITH
ENTERPRISE NEEDS
Infrastructure
Shared
Services
MAKE THE BUSINESS CASE
FOR CENTRALIZATION
I. Determine the Right Degree of IT Centralization
15
With increasing levels
of centralization, create
an IT–business interface
that can effectively
communicate business
demands to IT and
IT constraints to the
business.
CENTRALIZATION ARCHETYPE 3: INFRASTRUCTURE
AND APPLICATIONS CENTRALIZATION
KEY BENEFITS
■■
■■
■■
Staff liaison roles with
individuals who have
sufficient clout and
experience to function as
demand managers rather
than order takers.
A Step-by-Step Guide to IT Centralization
■■
■■
■■
■■
■■
Infrastructure centralization benefits
Enterprise applications centralization
benefits
Additional headcount reduction
in application staff
MAJOR DRAWBACKS
■■
■■
Loss of business unit–specific IT knowledge
■■
Larger management overhead
■■
Stronger skill pooling and knowledge
transfer
■■
Enterprise-wide IT applications complexity
reduction
■■
Better licensing agreements for a wide range
of applications
■■
■■
CIO EXECUTIVE BOARD™
IT PRACTICE
www.cio.executiveboard.com
© 2009 The Corporate Executive Board Company.
All Rights Reserved. CIO4991209SYN
Significant degree of role change for a large
number of IT staff
Increased need for managerial
and consultative skills
Criticality of the IT–business interface
for effective service provision
Clear visibility into the enterprise-wide
project queue, allowing identification
of opportunities for reuse
SUITABLE IF YOU…
■■
Potential loss of responsiveness to business
partners
NOT SUITABLE IF YOU…
Strive for maximum cost containment
■■
Have too few staff to effectively provide
applications development and maintenance
services in a decentralized manner
■■
Want to aggressively drive integration
and standardization
ALIGN THE DEGREE OF IT
CENTRALIZATION WITH
ENTERPRISE NEEDS
EVALUATE POTENTIAL
CENTRALIZATION OPTIONS
■■
Have very strong, historically autonomous
business partners
Have business partners that require a large
number of business unit–specific applications
Cannot build up the requisite skill set to
make the IT–business interface work
UNDERSTAND
GOVERNANCE
REQUIREMENTS
MAKE THE BUSINESS CASE
FOR CENTRALIZATION
16
Complete IT
centralization offers
the largest potential to
capture economies of
scale, but it also runs
the greatest risk of loss
of responsiveness to
business needs.
■■
This delivery model works
best for organizations that
have strict cost-containment
mandates for both IT and
the business or where agility
to respond to business
demands is not particularly
important.
CENTRALIZATION ARCHETYPE 3: INFRASTRUCTURE
AND APPLICATIONS CENTRALIZATION (CONTINUED)
Common Delivery Models:
Infrastructure and Applications
Shared Services
Infrastructure Shared Services and Applications
Centers of Excellence
Illustrative
Illustrative
Office of
the CIO
■
■
■
■
■
Office of
the CIO
CIO
Enterprise Architecture
Information Risk
IT Finance
IT HR
PMO
■
Applications Centers of
Excellence are most effective
if pockets of expertise
preexist in different
business units.
■
■
■
Enterprise Architecture
Information Risk
IT Finance
IT HR
PMO
Business Liaisons
Business Unit IT
Business Unit IT
■■
■
Business Liaisons
CIO
IT Governance
■
■
Applications
Shared
Services
■
Strategic Planning
Project Prioritization
■
■
Site-Based
Infrastructure
Support
■
■
■
Applications
Development
or Procurement
Integration
and Configuration
Maintenance
and Enhancement
Vendor Management
Project Management
End-User Support
Infrastructure
Shared
Services
■
■
■
■
■
■
Infrastructure
Shared
Services
IT Governance
Data Operations
Server Support
Networking and
Telecommunications
End-User Support
Infrastructure Planning
Vendor Management
■
■
Strategic Planning
Project Prioritization
■
Application
Center of
Excellence
■
Site-Based
Infrastructure
Support
■
■
■
■
■
Applications
Development
or Procurement
Integration
and Configuration
Maintenance
and Enhancement
Vendor Management
Project Management
End-User Support
■
■
■
■
■
Data Operations
Server Support
Networking and
Telecommunications
End-User Support
Infrastructure Planning
Vendor Management
See the IT Organizational
Charts Database for additional
information on IT organizational
models.
CIO EXECUTIVE BOARD™
IT PRACTICE
www.cio.executiveboard.com
© 2009 The Corporate Executive Board Company.
All Rights Reserved. CIO4991209SYN
ALIGN THE DEGREE OF IT
CENTRALIZATION WITH
ENTERPRISE NEEDS
EVALUATE POTENTIAL
CENTRALIZATION OPTIONS
UNDERSTAND
GOVERNANCE
REQUIREMENTS
MAKE THE BUSINESS CASE
FOR CENTRALIZATION
I. Determine the Right Degree of IT Centralization
17