At this point, the central IT staff snickers as they learn of these managers' failures, mumbling "I told you so" and "If they had only listened," all the while secretly enjoying the show. After all, it's vindication and an endorsement of their own expertise. It also can be used to rally the central IT troops, an us-versus-them mentality that seems to build morale in the short term but is almost always destructive in the long run. Sometimes it takes a radical reorganization, or even a merger, to right the teetering ship.

But instead of engaging in a kind of power play aimed at exposing the incompetence of departmental managers, the smart IT manager swallows a little pride and sees this escapade as an opportunity to be a hero.

There are two high-road options to consider. The first is to find a way for the central IT organization to help departments manage their system services better. The second is to offer an insourcing alternative, where the central IT organization acts as a contractor serving the needs of its departmental customers.

When considering the alternatives, you need to assess carefully the relationship between technology and the organizational structure. Consolidation of services can occur at many levels within an organization, and while we tend to think of a centralization/decentralization dichotomy, it's really more of a continuum. For example, a manufacturing organization may find it desirable to consolidate IT services at the division level when the divisions are geographically dispersed and each has its own facility or campus. A state governmental organization, on the other hand, might choose to consolidate some services across functional units within state office buildings located in major metropolitan areas. In any case, the IT manager evaluating consolidation strategies must be both knowledgeable and flexible in approaching the situation.

Partnering and Marketing

Traditional IT managers haven't always been adept at partnering with business managers or at marketing their own services. But an attempt to consolidate services requires just such an approach. Understanding what business managers need and having a portfolio of services suited to their problems is a must. Some level of chargeback is a valuable element of the insourcing strategy because it creates a customer-provider relationship in which the roles are clearly understood. It also helps departmental managers understand the cost savings associated with such an arrangement.

One important element of the marketing plan is to articulate clearly the services being provided and the costs associated with such services. It's also important to be explicit regarding the services that cannot be provided. In many cases, a central IT organization will find it desirable to market a basic set of services in order to spread support costs across as many users as possible. If departments need a more customized offering, they may be well-advised to take on the service in-house. For example, a central IT organization might offer a basic LAN service that includes a switched 10-Mbps connection for each user, as well as a suite of personal and group productivity applications launched from centrally administered file servers. While this may meet the needs of a large number of users, it may not be appropriate, for example, for an engineering group that needs access to highly specialized applications.

This kind of generic, commodity service consolidation seeks to apply simple economies of scale to the delivery of IT services. In marketing these services, it's important for the IT organization to emphasize the unique position it's in to provide such services. It may be able to take advantage of volume discounts on software. It may have better facilities in which to house servers to enhance fault tolerance. It will almost surely have more staff, allowing it to provide better after-hours response and more easily absorb the disruptions of staff turnover. In short, IT must appeal to the business sense of departmental managers. It usually isn't a hard sell, and if it seems like it might be, it probably isn't a good fit.

Providing Flexible Alternatives

While consolidation of services directly under the control of IT is the main goal of centralization advocates, such a strategy is destined to fail if the company's culture is not suitable or the organization lacks a WAN infrastructure adequate to consolidate servers. Thus, in many cases, the IT organization may wish to focus its efforts on a consolidation of services at some intermediate level within the organization. For example, it may make sense for the marketing division to maintain its own systems in cooperation with central IT.

There are a number of partnering strategies that can be implemented successfully. In all cases, it's essential for the IT organization to recognize that it is a service provider. As such, it likely will have significantly less control over decisions than it may be accustomed to. The degree to which central IT is willing to invest its own resources in a division-managed IT organization will be the primary factor determining its level of influence. Bringing expertise to the table can also help, but unless you're willing to put dollars on the line, don't expect to have much leverage.

The central IT organization also can add value by defining standards, negotiating volume-purchase agreements, providing formal and informal training, and documenting production system configurations. In most cases, it's valuable to involve divisional managers in strategic technology decision-making, even if that involvement is only consultative.

For many IT managers, insourcing arrangements or consolidation of services at the divisional level are uncomfortable compromises that diminish their direct control while diffusing accountability to a certain degree. It only takes a few divisional mavericks to make things messy. But short of an organizational revolution, this may be an inevitable compromise.

Dave Molta is director of network and system services at Syracuse University. Send your comments to him at dmolta@nwc.com.