Decentralization Creates Both IT Stress and Business Value

A new study from VMware shows that digital transformation is creating tension between lines of business and IT across industries worldwide.

Businesses Worldwide Grapple With Digital Transformation

VMware commissioned the Economist Intelligence Unit (EIU) and Vanson Bourne to survey IT and business leadership across the Americas, Asia-Pacific, Europe, and the Middle East.

The research showed, conclusively, that digital transformation is affecting businesses across all industries and across all regions. Business unit leaders are increasingly becoming key decision makers for technology purchases, and lines of business (LOBs) are authorizing their own devices, building their own apps, and purchasing their own hardware and software.

These purchases are driving innovation and competitive posture, but as a result, technology, once centralized in IT departments, is becoming more decentralized across the enterprise. These gains come at a cost as fragmentation stresses IT resources, increases expenditures, and creates security susceptibilities. The decentralization of IT across the enterprise leads to inefficiencies and vulnerabilities that potentially jeopardize the business.

Decentralization Creates Security Vulnerabilities and Increased Costs

Both business users and IT agree that decentralization has increased security vulnerabilities, with 73 percent of IT staff and 64 percent of business users agreeing multiple IT decision makers make it more difficult to keep the company secure from cyberattacks.

However, despite a lack of control over the purchasing, implementation, and proliferation of technology across the enterprise, IT is still widely viewed as responsible for cyber security.

A full 77 percent of those surveyed agree that it’s the IT department’s responsibility to manage the security of applications and data, and 71 percent agree that IT functions should absolutely remain in the control of the IT department to ensure security and compliance.

This divergence between accountability and control is putting stress on overwhelmed IT departments. The increasing purchase and implementation of technology across modern businesses is not only opening up unintended security vulnerabilities, but also creating complexity and cost overruns. Having multiple decision makers results in a fragmentation of buying power with vendors. According to the survey, companies average a 5.7 percent increase in spending as a result of decentralization of technology.

Decentralization Creates Business Value, Attracts Talent, and Increases Competitiveness

Despite creating potential security vulnerabilities, business units are embracing technology in order to realize efficiency, and company and market gains. This positive view of decentralization illustrates that LOBs are increasingly turning to technology because of the value it delivers.

Contrary to IT’s point of view, LOBs view decentralization in positive terms. 67 percent agree decentralization gives the business more freedom to drive innovation. Additionally, 67 percent of those surveyed agree decentralization enables them to bring new products and services to market more quickly. It also contributes to attracting talent and increasing employee satisfaction, according to the research.

Decentralization, therefore, is both delivering value and creating vulnerabilities for modern businesses. Decentralization is breaking down traditional silos between IT and business units, shifting roles, and creating possibilities for new syntheses. New collaborations between business units and IT—especially around security, cost savings, efficiencies, and innovation—are opening.

Businesses that embrace digital transformation are amending roles and responsibilities. In fact, 73 percent of respondents agree the IT department should be responsible for enabling other LOBs to drive innovation, and 64 percent agree the IT department should be responsible for enabling other LOBs to drive innovation while also setting strategic direction and remaining accountable for security. Increasingly, IT staff act as consultants, providing guidance, protocols, and security mandates for new tech solutions. Finally, 67 percent of those surveyed agree decentralization is driving IT to act as a service provider.

As the research revealed, businesses of all types are universally confronting digital transformation. The proliferation of new technology across the enterprise is a double-edged sword, both stressing resources and enabling growth. The companies that confront these challenges and address opportunities, threats, and changing roles are successfully transforming their businesses.

To learn more about IT decentralization and its business impact, explore this Business Innovation infographic.

Listen to a podcast series with the Economist Intelligence Unit (EIU), in which VMware further explores the topic of IT decentralization with EIU senior editor West Coghlan.