Centralization is the process of concentrating resources, such as personnel, capital, and information into a relatively small area. It can be achieved through centralized governance or central planning.
Without centralization, an organization would have to manage many different components, whereas with it they are managed from a single point in time and space by a higher authority. There are many advantages and disadvantages of centralization. This article will focus on highlights of some of the key points that need to be considered when choosing whether to centralize or not.
Advantages of Centralization
Advantages of Centralization:
Less cost
When a company centralizes its IT needs, it spends less on hardware and software.
Flexibility
When a company centralizes its IT needs, it can implement new software easily and quickly.
Speed
When a company centralizes its IT needs, it can get new technology faster than an organization with a decentralized IT setup.
Disadvantages of Centralization:
Security
When a company centralizes its IT needs, it has less security than an organization with a decentralized IT setup.
Scalability
When a company centralizes their IT needs, they have less scalability than an organization with a decentralized IT setup.
Control
When a company centralizes their IT needs, they have less control over the environment than an organization with a decentralized IT setup.
Furthermore, there are certain times where centralization is not appropriate, such as when there is a lack of trust between those involved or when there is a lack of shared understanding about how best to accomplish something.
In short, centralization can have its disadvantages but also has its benefits.
Conclusion
Centralization offers many advantages to businesses, but it also has limitations that cannot be ignored. While some benefits are undeniably positive, the disadvantages of centralization are often costly and difficult to recover from.