Managing a global company’s IT comes with a host of challenges. One of the most difficult involves striking an optimal balance between centralized and decentralized decision-making. Which choices should be the purview of local or regional IT organizations—and which decisions need to be made by global leadership? Too much decentralization and independence can lead to redundancies and unnecessary costs. Too much centralization risks forcing inappropriate solutions on situations that might be better served by uniqueness or customization.
Dutch global banking giant ING recently tackled this challenge in its Benelux operations. The company’s solutions and underlying thinking offer food for thought for other businesses that are wrestling with the same issue.
ING has multiple lines of business—including retail and commercial banking, investment banking, online banking, and insurance—in the Benelux region. The supporting IT is a web of capabilities and linkages that serves a wide range of business- and location-specific needs. These include, for example, customer-account data that can be accessed by multiple business lines, such as retail banking and commercial banking; and country-specific needs, such as reporting to local regulators.
The degree of complexity across the system is high, given the mix of commonality and uniqueness, and there are overlapping spheres of interest among local and centralized IT leadership. Over time, ING increasingly found itself facing questions about ownership rights whenever a technology-related decision had to be made. If a system unique to one country needed to be replaced, who had the final say on what to replace it with? In the case of software shared across the region, to what extent could a country customize that software to meet specific needs?
Rather than continuing to make such decisions on a case-by-case basis, as had been its custom, the company ultimately decided to develop a single, codified approach, one that would remove any questions about consistency and transparency. The trigger event for this decision took place in 2010, when a newly appointed board member responsible for the banks in the Benelux region requested a target architecture and IT road map that identified possible synergies. As the IT organization began to develop this, it realized that there were no clear guidelines that specified the balance of power between regional headquarters and individual countries in the region with regard to information technology decisions. Hence, the task for IT leadership was clear: design an if-then framework that clearly spelled out decision criteria that all parties could understand and align with.