A central function that controls an essential internal service, such as IT, finance, or procurement, gives slower and worse service to departments that resist it, and blames policy, capacity, or the queue.
An example
For a year, the director of outpatient operations at a hospital network had argued that the clinics needed their own scheduling software, and central IT had opposed it at every steering meeting. That winter her tickets began to age. A request for two workstations at a pediatric clinic sat for five weeks; the same request from a cardiology clinic that had backed IT's platform cleared in three days. Her exception requests came back asking for more documentation, then a security review, then a new budget code. Nobody refused anything. The chargeback for her clinics' support rose eleven percent under a new allocation formula. IT's monthly dashboard, which IT produced, showed every service target met. When she asked for ticket times by requesting department, she was told the system could not report that way.
Why it works
The central function makes alignment easier, because aligned departments get tickets worked promptly and exceptions granted. It makes independence worth less, since a department that wins its argument for autonomy still cannot get a server provisioned. And it makes resistance costlier through delayed work, missed deadlines, workaround costs, audit findings, and a reputation as the team that misses commitments. Its preconditions are a real monopoly, delays that can be defended as policy or capacity, and a function that controls both the service and the metrics by which it is judged. The function never has to say no.
The thinking behind it
Jeffrey Pfeffer Jeffrey Pfeffer's The External Control of Organizations: A Resource Dependence Perspective (1978) argues that whoever controls a critical, scarce resource gains power over those who depend on it. A central IT or procurement function with no internal competitor holds exactly that position. It explains why service quality can become a means of control, and why a credible outside alternative weakens the function's hold.
Ronald H. Coase Ronald Coase's The Nature of the Firm (1937) argues that a firm keeps an activity inside only while organizing it there costs no more than buying it in the market. A central function that degrades service to some departments pushes its internal cost above what the market would charge them. An outside vendor's quote applies Coase's test directly, and shows the board what a carve-out would save.
Oliver E. Williamson Oliver Williamson's The Economic Institutions of Capitalism (1985) explains that investments specialized to one relationship lose much of their value outside it, leaving each party exposed to the other taking advantage. Departments whose systems and data are built around one central function are in that position. Published, independently produced service metrics are the safeguard, because they make the advantage-taking visible.
Warning signs
Ticket aging and exception approval rates vary with the requesting department, even for the same type of request. Compliant requests clear the same day while others go back for more documents, again and again. Chargebacks or allocation formulas shift against particular units. The central function sets the metrics used to judge its own performance, and those metrics show every target met. Proposals to rebuild a local capability are called duplication.
How to defend yourself
Fighting ticket by ticket is where the function is strongest, so move the contest to how the service is run.
- Log your own requests: what, when, and when each was resolved, alongside the same request types from other departments where you can see them.
- Insist on ticket-aging and approval data broken out by requesting department, and escalate above the central function if it is refused.
- Take intake and chargeback mechanics to a governance forum.
- Build a credible alternative, such as an outside vendor's quote, and be ready to show what a carve-out would cost and save.
Make the case to the board or the chief executive in terms of the efficiency mandate the function was created to deliver, and show how far it has drifted.
How a leader shuts it down
Publish service metrics for central functions broken out by requesting unit, produced by someone other than the function itself. Provide third-party arbitration for service disputes. Keep a credible option to source the service elsewhere, and be willing to approve a carve-out when a function uses its position to set priorities that belong to the business.