A decentralized computer system, as opposed to a centralized one, is collection of autonomous computers which communicate with one another to perform a common service. A decentralized system might occupy a single room, but more typically decentralized systems have geographic and organizational diversity.

The world telephone system is the biggest and best example of a decentralized system. It consists of thousands of computers, and almost a billion terminals. Some of the nodes of the system are tiny local PBX's while others are quite large, able to handle many calls per second. Different parts of the system are operated by cooperating organizations with different hardware, different languages and different ideologies. They have agreed to protocols which allow direct dialing from anywhere to anywhere and the consequent automatic routing and billing.

Other examples of decentralized systems can be found in the world travel industry system, inter-connecting travel agents with hotels, airlines, and other reservation systems, and the emerging electronic financial system, connecting financial institutions, businesses and governments.

These systems have the following common features:

* Diverse organizations and organizational procedures,

* Diverse computer architectures, both hardware and software,

* Diverse terminal types,

* Diverse system sizes, from tiny to large, and

* Diverse site environments.

Decentralized computing is a trend in modern day business environments. On the other hand centralized computing was prevalent during the early days of computers. Decentralized computing involves allocation of resources, both hardware and software, to each workstation. In contrast, centralized computing exists when the majority of functions are carried out, or obtained from a remote centralized location.

A decentralized computer system has many benefits over a conventional centralized network. Desktop computers have advanced so rapidly, that their potential performance far exceeds the requirements of most business applications. This results in most desktop computers remaining idle (in relation to their full potential). A decentralized system can utilize the potential of these systems to maximize efficiency. However, it is debatable whether these networks increase overall effectiveness.

All computers have to be updated individually with new software, unlike a centralized computer system. Decentralized systems still enable file sharing and all computers can share peripherals such as printers and scanners as well as modems, allowing all the computers in the network to connect to the internet.

A collection of decentralized computers systems are components of a larger computer network, held together by local stations of equal importance and capability. These systems are capable of running independently of each other.

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