Exploring the Impact on a Firms Agility through Centralised Technology Capabilities: A Quantitative Research Approach

The value generated from information technology (IT) has long been discussed in both research studies and organisations. Organisations demand cost efficiencies from their IT functions, combined with greater agility to react rapidly to market opportunities. Traditionally, IT functions have been centralised; however, given the perceived low performance of centralised functions, some organisations have decentralised their IT capabilities. Despite there being many research studies on IT performance and IT organisations theory, research gaps remain in identifying whether IT performance influences an organisation’s decision-making, specifically around IT organisational structure. While it has been highlighted that IT can enable firms to be agile, little is known of the elements and the contexts in which IT enhances business value through its capabilities. The limited understanding of the value that centralised technology capabilities generate can skew perceptions within firms as to the real value that technology provides to an organisation’s ability to operate in a marketplace. Perception-based decision-making by business executives may lead to organisational structures being incorporated, which may not essentially address the root cause of the technology performance gaps; rather, it merely provides a short-sighted resolution to a problem that different means could address. By better understanding technological capabilities and their value within an organisation, firms can address and enhance a firm’s key assets of people, process and technology, while designing an organisational model representing the firm’s strategic vision, goals and goodness-of-fit. This study assessed whether IT capabilities in centralised IT functions affect a firm’s market and operational agility, while also exploring whether a relationship exists between centralised IT performance and a firm’s decision to decentralise their IT organisations by devolving IT capabilities to individual business units. The study used quantitative analysis and online survey data collection methods. The online survey attracted 212 participant responses, resulting in a 60% response rate, overall. Survey participants were primarily from retail organisations (39%), with the remaining participants predominantly from other industries. The study adopts an existing agility model to understand the perception of a firm’s employees regarding the value generated through centralised IT functions. A combination of Pearson correlation and multiple linear regression parametric tests were used to accept or reject the hypotheses. The study identifies that centralised IT organisations can no longer act as a silo function within the overall organisation, with the threat of decentralising IT functions a stark reality. Firms depend intrinsically on technology, and the expectations and needs technology serves in a firm’s growth increase continuously. Market competitiveness and increases in customer demand and expectations fuel this increase. As a result, executive and business leaders expect IT organisations to adapt to the agility of the markets and to provide measurable value generated through IT. The study highlighted that IT capabilities are related to a firm’s ability to react to market needs and can prove influential in decentralising IT capabilities. The study made recommendations for IT organisations to adopt technological advances in the areas of Cloud computing, API-Microservices architectures and improvements in project delivery through Agile delivery practices, enhanced governance and greater strategic alignment between IT and business functions.