Advantages and Disadvantages of Decentralized Term Paper

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For purposes of this
analysis, the latter point is considered the main focus on what in
actuality are the advantages of centralization. These include the
following factors:
. Those resources, processes and functions that require consistency,
durability, economies of scale and optimized operating costs (Hess, 1996)
are best centralized as collectively an experience effect, much like a
learning effect associated with economies of scale, begins to influence
costing, timing, and overall efficiencies of completing these core
process tasks.
. Highly shared content in many forms including contracts, product content,
material planning, supply chain, logistics, sales and service information
needs to be centralized as many processes and tasks make use of this
information to complete their tasks. Likewise, key performance
indicators and metrics of performance that apply to processes that in
effect touch every major functional area of the company also need to
specifically be included in a centralized repository.
. Ability to create a single and cohesive Service-Oriented Architecture
(SOA) that specifically is structured to create greater efficiencies in
core business processes and have a single version of the truth to work
from, many organizations are moving back to a centralized architecture
specifically for this reason. Ironically many claim that SOA
architectures make them more responsive and market-driven, yet in initial
phases the SOA architectures are centralizing core functions and
selectively publishing through XML specific data sets and applications
out to distributed locations.
. When organizations have organized teams into specific functional areas,
for example logistics, supply chain planning and execution, marketing or
engineering, a centralized IT structure is typically the best possible IT
infrastructure to support the specific business strategies of these
functional groups. CIOs who have specifically used this approach report
clearer job descriptions and higher levels of morale, as employees are
clear with regard to what is expected of them, according to CIO Magazine
(2001).

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US Space Alliance's CIO Kathy Tamer reports that the
centralization of strategic planning and integration, platform
engineering and operations, application engineering services, data and
documentation management, IT security, and user support services have
made it possible to trim 17% of total staff levels through job re-
assignment and attrition. The US Space Alliance anticipates savings of
$300,000 per year due to centralization of these vital functions. What is
impressive about this centralization strategy on the part of US Space
Alliance is that there has been no need to relocate any member of the
core centralized teams.
. Another advantage of centralized IT structures is the ability to create
Centers of Excellence, which are really teams of senior functional
department leaders that create working teams to address complex and
strategically important issues that the company has to contend with.
This is often referred to as best practice teams whose job it is includes
looking at the time taken to complete tasks manually and then selectively
automate them through business process reengineering for higher levels of
performance.

Summary

The need for greater time-to-market and competitiveness pushes many
companies to employ a highly decentralized model for their MIS and IT
strategies. Conversely the cost reduction and efficiency gains possible
with centralization strategies is gaining significant momentum in many
global companies today. The intermediation of these two trends is the rise
of Software-as-a-Service (SaaS) platforms that include hosted applications
that rely on integration within the hosted platform itself. Also in
support of centralization are SOA platforms and architectures that look
first to create an infrastructure then provide XML-based messaging and
integration to regional locations so information can be delivered on
demand......

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