Splitting demand from supply in IT

Many companies, in their zeal to improve IT's ability to meet business needs, have brought teams of IT developers into the business units they serve, even as those companies are centralizing the larger core of basic IT services. Although moving IT into the business helps to align development efforts with business goals, it also has the unfortunate consequence of fragmenting IT developers across business and functional units, so coordinating and prioritizing projects becomes harder.

In two business units separate teams, using different vendors and technologies, may simultaneously be creating similar applications. Business units may be satisfied with the short-term results, but the company as a whole may suffer from high development costs, poorly managed performance, and difficulties deploying cross-group functionality.

At the other end of the spectrum, companies that have focused on efficiency through centralization have struggled with agility and speed in developing applications. Business units can become frustrated by long delays in the deployment of needed capabilities, and IT may be viewed as an unresponsive bureaucracy, a black hole for business requests.

So how can companies achieve both agility and efficiency in application development?

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Source: McKinsey Quarterly