The Differences of Decentralized and Centralized System in a Business

Decentralized and Centralized Systems in Businesses

Businesses have different logistics and most of the time, they are decided considering the end result. When it comes to business process, they can either be centralized or decentralized. You might think every company should go for the centralization as it is obviously the better option. In fact, this is what SAP services offered and if you are looking to hire for an SAP Partner Malaysia, you should be able to understand why.

However, you will be surprised to know that some companies prefer decentralization. Why do you think so? To understand these two options, let us differentiate them.

You can take a look at this video for more information:


Information or data is just stored in the individual departments. This can be advantageous at times, but usually disadvantageous. Yes, the information is safer as they are confined to different channels, but then again, processes will not be as fast as one has to ask the other departments first for some information before pushing through what he needs to do.

A lot of problems can come up with decentralization and one of that is coordination. Because each channel only knows the data about their department, it will not be automatic for them to deal with tasks that involve the other departments. They still have to gather information like the availability, budget and so on. This can make the task more time-consuming.

A chance of duplication of efforts is high as no one knows what the other channel is holding. Each channel will also assign someone for the storing of the data and at the same time, each one will also submit the information to the assigned member of each channel. This can also take some of the business hours.


Centralization means the control or the data is placed in one storage only where everyone who is involved can easily access it.

In the process, businesses can benefit the most as each one won’t have to wait until the needed information will be given to them to start with any project. In this process, data is optimized cost-effectively.

Consistency is another reason why centralization is better for every company. If there is some things that needs immediate action, the assigned department can act on it right away as all the needed information is ready. That is not the case when it comes to decentralization where one has yet to access the needed information. Now, what if the assigned person in a certain department is not around? So, the project has to wait! Chances are customers will be long gone before the needed information will become available.

There will be less time organizing the data as only one assigned team can do that. Unlike the other option wherein each department will have an assigned person.

Yes, without a doubt, the SAP solutions can make the life of every business owner easier. This is why it is important that you have an SAP consultant by your side to oversee the integration of the software to your business undertakings.