Page 550 - Handbook of Modern Telecommunications

Network Organization and Governance 4-81

The general wisdom in centralized (e.g., federal, territorial) governance pattern is that anything that
can be done centrally should be done centrally. So, with uncertain or incomplete information, enter-
prise executives will tend to back centralization, consolidation, and shared global business processes as
a default position. Local/regional or Line of Business (LOB)-specific processes and systems will still be
perceived as sources of inefficiencies and will be tolerated only as exceptions.
From an IT perspective, the centralizing governance pattern will usually focus on partial (from a
geography or LOB perspective) consolidation of process, application, and infrastructures. Characteristic
projects include the adoption of common enterprise application backbones and consolidation of data
centers within various regional hubs (e.g., the Americas, Europe/Middle East/Africa, Asia Pacific) or
specific LOBs (e.g., in a financial service enterprise, centralization is pursued within and not across
private banking and retail banking divisions).
Despite the compromise with dissimilar regional hubs or LOB-centric consolidation initiatives,
certain enterprise processes will be implemented on a cross-region/cross-LOB global scale (e.g., pro-
curement, networking infrastructure, global sourcing and licensing contracts, identity and security
infrastructure). Management will determine which specific processes/operations must be implemented
globally, with some local exceptions being tolerated (e.g., regional service providers, local suppliers offer-
ing better and more competitive procurement possibilities). Characteristic of this pattern is that central
and regional approaches are perceived as exceptions to the default central/global approach. Therefore,
the “burden of proof” rests on the local/regional advocates, who must justify why such exceptions to the
general corporate wisdom are necessary.
In Figure 4.5.2, business perspectives are:
• Common business processes within regions (e.g., the Americas, Europe, Middle East, Africa
[EMEA], Asia Pacific)
• Tolerance of local/LOB specificities through justified exceptions
• Certain processes must be global
Typical IT mandates are:
• Regional enterprise application backbones (e.g., ERP, CRM, PRM, SCM, BI)
• Regional data center consolidation
• Global services (sourcing, licensing, procurement, communications, identity and security)

4.5.2.1.3 Centrifugal Governance Pattern
Despite the current popularity of hard management and centralizing governance patterns being perceived
as more efficient in terms of cost reduction, analysts believe more decentralizing governance will regain
interest in both the medium term (two to three years) and the long term (four to six years). Indeed, during
the next six to seven years, leading Fortune 2000 executive management will seek competitive advantage
through flexibility and will increasingly recognize the pragmatism and business value of more loosely
coupled cross-enterprise integration models as a way to cope with constantly changing market conditions.
This will translate into noninvasive CMA models, where integration of local or lower granularity processes
is embraced as a strategic asset for the corporation and investment in enabling skills and technologies is a
strategic corporate goal. Analysts identify these as “centrifugal” governance patterns (see Figure 4.5.3). By
centrifugal, analysts mean that the center of gravity remains in the periphery (i.e., the local LOB or geog-
raphy) level, while the global enterprise maintains a balance to avoid inefficiency and waste.
In the centrifugal governance pattern (e.g., decentralized, city-county), the individual entities
involved in CMA operations will seek enhanced value as a whole without necessarily imposing a strict
homogeneity of processes, applications, and infrastructures. The corporate CMA goals of achieving
economies on a space scale (e.g., breadth of product/service offerings, geographical reach, shared/coor-
dinated production and procurement, virtual inventories) as well as economies of time (e.g., just-in-time
manufacturing, time-sensitive production/marketing/selling) and consistency (e.g., global branding,