Centralization versus Decentralization 1 Running head: CENTRALIZATION VERSUS DECENTRALIZATION Centralized versus Decentralized Information Systems in Organizations

It has been discovered that in many organizations the information technology department is a separate entity, while in others each business unit incorporates their own information technology department. The former represents a centralized approach while the latter represents a decentralized approach. The centralized IT department suits some organizations better than others. However, it is becoming increasingly obvious that organizations may often consist of departments that prefer centralization as well as ones that prefer decentralization. Innovation and efficiency are the desired goals of the IT system in many organizations. In general, the available literature has identified decentralized systems as a major promoter of innovation. On the other hand, the centralized approach can promote a more efficient and controlled organization. Centralization versus Decentralization 3 Centralized versus Decentralized Information Systems in Organizations The general pattern of authority throughout an organization determines the extent to which that organization is centralized or decentralized. A centralized organization systematically works to concentrate authority at the upper levels. In a decentralized organization, management consciously attempts to spread authority to the lower organization levels. The traditional, centralized organization has long been favored as offering standardization and efficiency, while the newer decentralized organization is being touted as more flexible and effective. Information Systems are a part of organizations. From a business perspective, information systems can be defined as an information technology orientated solution to organizational and management challenges. The interaction between the organization’s IT unit and other units is a key determinant of organizational success. Information systems can be centralized or decentralized. There has been a strong emphasis on the centralization versus decentralization issue in existing IT structure research. This has meant that the other IT research issues of a business unit have not been explored in detail. An organization’s IT structure should support its strategy and engage in research beneficial to this. However, current research into strategy supportive structures has stopped at the strategy-structure interface and did not look in detail at the IT-business unit interfaces. The key to better research is exploring the interface between business units and IT at a deeper level.