In the energy space we saw a trend emerge in the late 1990 and early 2000 timeframe where trading groups in utilities (or larger energy firms) brought IT functions into their own departments. They still (generally) had to work with corporate IT but largely ran everything IT for the trading function. This was largely driven by their feeling that traditional IT couldn't move fast enough for their business or didn't meet their needs in other areas. So, rather than "fix" IT, they built their own.
Today, a lot these firms have gone back to centralized IT but retain some folks that are the liasson between the business and IT. Personally, I think larger firms need some centralized IT for economy, security, and strategy. But, they need to be aligned to the business strategy and commited to enabling that. That said, I agree that firms need to have a holistic approach to these functions as the lines are getting increasingly blurred.

Always a fascinating question and problematic on at least two fronts:

1. "IT vs. Business" thinking

I remain perplexed that organizations don't seem to view IT as another function of the business. Continuing to look at IT as somehow "other" than the business sets expectations low and never fully embraces the power of what is possible.

1. IT professionals who don't continually reinvent themselves

Fundamentally, with the rapid change of both business and technology, IT professionals must be continually reinventing themselves to meet continually evolving demands. The general mindset needs to be "I'm working myself out of a job". Because if and when they do they are creating an opportunity to reinvest talent and capacity into the organization.
If we think about a car brand, there are many players involved:

• The overall leadership and brand definition - which guides the creation and design of all products in the suite
• The product or model owner - who is accountable to define the product vision, roadmap, financials, and go-to market strategy
• Those who build the car consistent with the overall brand promise and the specific design specs of the model

Each of these players may be "savvy". But that really isn't the important thing. Each of them has a role to play. They need to be flexible and know when they should extend beyond their role to contribute to the larger objective. But at no point does it make sense that the model owner (let's generally align this with your "savvy business person") asks when we can get rid of those who manufacture the model (perhaps your "IT dept"). This line of thinking would sink the brand.
The reason we find ourselves asking this question is we have IT people who operate too rigidly within traditional constructs (which proves to be a bottleneck) and we have business people who don't particularly understand how technologies can deliver more power by integrating well within the overal architecture (which leads to higher expense and fragmented data).

The lines between Business and IT continue to blur. There are 3 drivers that are pushing the trend to remove IT as a seperate function.

1. IT is no longer a separate function to the business - it is the business. If your IT has not moved from the back office to the front office you will be out of business within the next 3 years.
2. Agile development pushes towards full stack developers not only in tech but also for product owners. Product owners can no longer stay on the technical sidelines.
3. IT is frankly getting easier. More and more their are solutions that don't require a big IT build or operational support (aka cloud). You need your IT shop for challenging custom software, complex integrations and large transactional processing.

The downside of this is cost. When you integrate your IT shop into the business more money inevitably on software duplicity, software license optimization and efficiency of resources. These issues need to be address to avoid the cost of everyone having their own little IT kingdom.