Sith doing something entirely to the detriment of the Empire as a whole for no other reason than to expand their personal power isn't exactly a rarity. I'm only surprised it took backdoor manipulation by a third party for it to happen.
Some random guy with a Star Cabal nametag barely hidden in his jacket didn't walk up to the Dark Council and say "Hey, derp, let's get rid of Imperial Intelligence!" Throughout the class line both the Sith and the military (usually called out with the examples Darth Baras and General Rakton) are perpetually scrabbling to get more of Intelligence's resources - the dissolution of the department was not the first time their names came up. It's just background chatter as you pass in and out of cutscenes at HQ, but it's there. Imperial Intelligence was a ripe target exactly because it was a large, expensive, very useful tool that had been built up with considerable time and effort. Imperial leadership wanted it, all right, but individual players didn't necessarily want it in the public domain. It wouldn't take much to talk several major players into finally making a grab for individual control of it or as much of it as they could get.
Dissolving Imperial Intelligence was a stupid move for the Empire, but it was a logical (as much as any Sith action is logical) move for Darth Baras and the rest of the individual Sith egomaniacs, and if they needed convincing, well, the Star Cabal's agents could give a little push. It would get the massive, too-aggressive headache that is Imperial Intelligence off the Cabal's case.