Yum Decentralizes—But That’s Far From The Reverse Of Centralization

Written by Frank Hayes
July 29th, 2010

Decentralization has arrived at Yum Brands–the $10.8 billion fast-food giant that is home to Pizza Hut, KFC and Taco Bell, among others–and CIO Delaney Bellinger is on her way out. Bellinger, who has headed IT at Yum for the past decade, says Yum has moved to a more decentralized IT model. Bellinger is helping with the transition until the end of September, when she’ll retire from the company.

Yum’s shift to decentralized IT raises some interesting questions. After all, Bellinger has spent much of her tenure as CIO working to centralize IT for Pizza Hut, Taco Bell, KFC, A&W and Long John Silver’s. Indeed, getting the restaurants working to the same set of IT standards has been part of her job since before they were spun off from PepsiCo in 1997. So after all that work, why would Yum reverse course and decentralize? More to the point, what does it mean to manage the transition from centralized IT to decentralized IT? Doesn’t that just mean cutting loose business-unit CIOs so they can focus on their units’ business needs rather than toe the line for central-IT bureaucracy?

No, it doesn’t. Decentralization is not the reverse of centralization. Or if it is, you’re doing something terribly wrong.

Centralization is relatively straightforward. The goals are clear: You want to implement standardized equipment and standardized procedures. You want to eliminate redundancies and variations. You want to reduce the costs that come with whatever is different by reducing the differences in how IT is used by your various business units.

That usually translates into company-wide IT standards, and all the bureaucratic overhead that comes with enforcing those standards. But centralization can result in real savings in equipment and support, along with the elimination of wasted effort.

On the other hand, decentralization isn’t really about unwinding standardization and consistency. There’s no point to that. No one wants to inject waste and get rid of savings. Nor is decentralization just about eliminating bureaucracy, especially when it has helped provide a clear, consistent IT vision for the whole company.

In fact, decentralization isn’t really about the same things as centralization at all. It doesn’t involve going in the opposite direction. It’s really about turning IT inside out.

Consider one of the paradoxes involved in a move to decentralization: Business-unit CIOs must learn to be able to work independently, without always looking upstream for guidance.

“Decentralization is not the reverse of centralization. Or if it is, you’re doing something terribly wrong.”
– Frank Hayes

But to get to that independence, they need–what else?–guidance. No magic switch exists to turn entire business-unit IT organizations into self-directing operations. There are new skills for CIOs to learn—and for CIOs to teach—because everyone in their IT shops will have to make the transition to decentralization, too.

In other words, the move to decentralized IT can’t involve abandoning centralized leadership—at least not all at once.

The paradoxes don’t stop there. Decentralized IT doesn’t mean business units can just go their own way, ignoring everyone else. If they do, it’s a costly mistake. Some of the most valuable resources for CIOs in a decentralized-IT situation are their fellow CIOs.

In part, that’s because every business unit has its own technology needs. The more decentralized a business becomes, the more likely it is that each business unit will develop its own areas of expertise. So if one CIO needs to start figuring out social networking or cloud computing or PCI or iPhone apps, there’s often a go-to guy among the other CIOs who has lots of useful experience in that specific area. Even if there isn’t, the combined experience of fellow CIOs adds up.


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.