No matter which models do you adopt, to incorporate UX inside an organization successfully, you have to work on different levels, multidisciplinary collaboration is the key.
Digital is the age of customers. Therefore, UX/CX is emerging as one of the significant aspects of business strategy. The strategic goal of UX within the organization greatly influences which model makes the most sense (unifying a portfolio vs. incremental improvement of product lines). So, it would be interesting to experiment how to structure UX teams to satisfy the strategic goals of UX in their organization and what you have learned in the process?
Centrally-managed, but distributed as team members in Agile development shop works best in the most of cases. The team does need to be centrally-managed, however, as it can be very hard for UXers to feel the love, empowered, or believe they're getting strong leadership if they're lost at sea in teams. The funding model is very important for a centrally-managed team, especially in companies where UX is not well established. If a UX resource needs to charge back to individual departments, then it means the centralized UX team becomes a body shop that is always hunting for work. If the UX team comes 'for free' and is built into the overhead, then it increases the odds that the distributed departments will be willing to use UX resources. It allows business lines to incorporate UX thought-leadership into their projects without impacting P&L while allowing the UX resources to benefit from the creative community and shared purpose of a centralized UX organization. The "agency" model (either internal or external) almost always creates better initial work, but actually prevents team from "owning" UX and developing the more widespread empathy or domain understanding the creates a long-term sustainable improvement in usability and customer experience.
A centralized team, in a company that is new or immature in regards to UX, will likely need to focus on quantifying their value to the business. If that model is in place, the next question is: how does one quantify the business value of the UX team to the business lines, essential in order to increase funding/hiring over time, as well as measure UX resources performance for raises/promotions. There is always that honeymoon period as an organization gets excited about UX, but in-house, centralized design teams that have failed to demonstrate or quantify business value quickly and when budgets get tight, are one of the first areas that are cut. This is symptomatic of a perception issue that a dedicated design organization is a nice-to-have, and not at the center of a company's success. It is also symptomatic of the impatience in large companies and a failure to recognize that UX as a strategic force often requires time to show the tangible results. Centralization creates a unique challenge for the UX manager to make evidence-based claims of the value of his/her team when requesting budgets and proposing promotions. Product managers and their teams justify their existence frequently based on revenue, market share and customer satisfaction metrics. If the UX team is decentralized and belongs to the product team, then it is easier to connect the value of UX to the performance of the product. You are also bound to the product team and they are more likely to champion you.
The formula to present the business value of UX: One of the biggest benefits is a focus on planning what areas UX will focus on based on strategic alignment. By default, this brings UX into overall strategic planning conversations with the leadership team and highlights the value they bring to that process. Feedback from the product teams regarding their 'perception' of the value of the UX resources they work with + measurements of experience improvement over time + market adoption of products that UX is involved in = business value of UX to the company. Tracking these factors seems like a significant challenge if the team is centralized. If the UX resource works within a product team, it is very simple for their manager to measure their impact and reward them appropriately. These individuals are assigned to projects as appropriate to a project's strategic value. Local alignment is the mixed model, making sure there is a complete UX team in each of your development centers, with strong UX leadership and a seat at the table with the PM and Strategy leadership team. Each individual UX team member is embedded with a specific product line / domain to maintain consistency with users/product teams over time. But all UX team members in the local center are able to assist each other in project work to ensure complementary skill sets are brought to bear on the work.
No matter which models do you adopt, to incorporate UX inside an organization successfully, you have to work on different levels, management has to understand the value to become supportive, the project teams needs to understand, to be able to work effectively together, the other functions inside organization (PM, marketing, sales) need to understand and fully take advantage of the opportunities, UX professionals is needed to guide and perform work - multidisciplinary collaboration is the key.