Back to the Future: The Rise of Departmental Computing … 21st Century Style

In the past couple of years I have been noticing a distinct trend, especially in marketing and sales organizations, towards developing departmental IT capabilities.  In some cases, this has extended beyond just a few web site developers to having a true “IT Department” responsible for development and maintenance of core systems like CRM (Customer Relationship Management) and MRM (Marketing Resource Management).   Which got me thinking that this all seemed very déjà vu-like.

When I first started out in computing in the late 1970’s and early 80’s, a new trend in computing called “departmental computing” was shaking the IT world.  Individual departments were acquiring minicomputers that were not attached to the central IT department’s  minframes.  This trend was driven by a number of factors, but most critically was the perceived (or real) lack of responsiveness of the centralized IT function to the growing needs of the business units to exploit informational technology as a strategic differentiator.

The rise of decentralized/departmental computing had a number of implications across all the dimensions of a company’s business ecosystem including: business agility, competiveness, staffing, process, and technology. From an organizational dynamics standpoint, the impacts were predictable: central IT resisted the trend and business units embraced it (if/where they were “allowed” to).  The result was classic decentralization – improved responsiveness to departmental needs, and increased costs/inefficiencies due to:

  • More Staff
  • More (incompatible) Technology
  • Redundant and Inconsistent Data
  • Incompatible Business and Technology Processes

Over time, the issues of decentralized computing started hurting overall enterprise effectiveness and competitiveness.  In response to the need for better systems that could work across the  departmental silos, a new technology wave occurred where massive, configurable, vendor developed enterprise-wide ERP systems from companies like SAP, BaaN, and Oracle became common and departmental computing faded (though never disappeared) since it took a large centralized IT function to support the ERP applications that were meeting much of the needs of departments.

Which brought us up to the late 90’s and the Internet era where technology was allowing for true online business models.  These business models required speed and nimbleness … something that the large ERP systems were not very good at. And this trend has continued to accelerate – aided by new tools and technologies like software-as-a-service.

Which brings us back full-circle: the business demand for technology is accelerating and many centralized-IT functions are not able to keep up.  And as we saw in the 80’s, departments are going off on their own and buying/building their own technology development and deployment capabilities.

In a future posts, I will discuss how departments can develop IT capabilities while avoiding some of the major pitfalls of the past – as well as what centralized-IT functions can do to meet these accelerating demands so that departments don’t feel the need to strike off on their own.

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