Laura Schmidt

In “IT Governance: Stop the Pendulum,” Doug Lewis argues that the IT governance structure falls into one of three categories; centralized, decentralized and hybrid and that the appropriate IT governance structure really depends on the overall strategy of the individual firm. Lewis finds that companies often switch back and forth between centralized and decentralized IT organizational models, but are often unsatisfied with both. Each restructuring or return to centralized/decentralized brings change in informational leadership, disruption to the company and large productivity losses. Despite restructuring and developing a new governance model filled with the promises of new value, the new model frequently fails because leadership fails to consider the fit between the governance model and the overall strategy and structure of the company. Both the centralized and decentralized models contain strengths and weaknesses. A centralized IT organization is efficient and able to run stable and repetitive global operations. However, don’t expect a centralized IT structure to respond to local requirements quickly or with flexibility. In comparison, decentralized governance models are well-aligned to strategies that require responsiveness and flexibility to local requirements. However, don’t expect a decentralized model to respond well to standardization or cost-effectiveness. Finally, Lewis recommends the hybrid governance model- which applies a centralized model to centralize processes that need economies of scale and don’t require agility. As expected, it will decentralize functions that need to be responsive to market conditions and business unit strategies and are specific to business unit groups. Lewis argues that in order for the hybrid model to be successful, a governance document is required that will outline the working relationships between individuals, applications and networks; describe how to handle disputes; and provide orientation on the day to day tasks in IT business.

When Lewis’ model is compared general business knowledge, it appears that his analysis is not a groundbreaking suggestion. As with any individual business unit in a corporation, the individual business unit’s structural model and strategy needs to be aligned with the firm’s overall business strategy in the global business environment. For example, human resources strategies need to be aligned with the firm’s overall business strategy. What Lewis falls short of suggesting is that the firm’s IT governance model should coincide with the firm’s global business model. It seems appropriate that there are similarities between different IT governance structures and different global business strategies. Therefore, it would be worth exploring whether a multinational enterprise who requires local responsiveness and flexibility would be better off with a decentralized IT governance which can develop platforms flexible enough for local customization A hybrid could be best used in a global enterprise to centralize/standardize functions to obtain economies of scale while keeping other functions local to reinforce flexibility.