CIO Connect magazine, April 2006

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The view from here: global IT strategies
By Sue Norris

There is no question that globalisation is having a very real effect on the way that organisations now plan their sales, marketing, project management and customer service activities. Enterprises no longer want to operate and be viewed as a series of autonomous single entities in each of their market territories. This is expensive, inefficient, leads to an inconsistent brand experience and, above all, does not support customers in the way they now want to be dealt with.

This, in turn, is having a substantial impact on the way IT is planned and managed. Not only does global IT standardisation and management enable greater efficiencies for the business (because better deals can be struck with suppliers if the terms are global, and there is generally less wastage if everyone uses the same systems), it also makes it easier for dispersed teams to share data and work together.

This is in the best interests of the business and its customers. It also makes it easier to ensure that operations in less developed countries are brought in line with more established business units, and that new markets can be entered with relative ease and cost efficiency - thanks to the pre-existence of best practices, standard systems, centralised resources and skills, and supplier relationships.

So how are CIOs around the world tackling the growing need for a global IT strategy? Is ‘going global’ a global problem?

"In a world of global business, it is essential to have information readily available, so that you can be prepared and act quickly," says Wolfgang Herrmann, CIO for the Asia/Pacific region for international logistics company, Schenker.

This same statement could quite easily have come from a European or US-based CIO. What’s interesting is that, as the world gets smaller, the challenges facing organisations from one line of longtitude to the next start to become strikingly similar. From Boston to Bangkok, it appears businesses are grappling with the same issues – how to bridge distance, overcome time differences, present a united front, and deliver to the market efficiently and cost-effectively.

The fact that Schenker so happens to be in the delivery business makes its situation all the more poignant. If ever an organisation needed to be slick, a logistics services enterprise is it. "Wherever there is a purchase that leads to an export somewhere in the world, the data has to be ready at all points – origin, destination and creator – as soon as possible," Herrmann says.

As if globalisation itself wasn’t enough of a challenge, Schenker also has to keep up with the fast pace of growth currently characterising the Asia/Pacific market, which demands highly flexible, adaptable IT capabilities.

But this is where a centralised, standardised IT strategy really comes into its own. "For the benefit of the business, we have been consolidating and standardising our IT over the last few years," Herrmann says. "This allows us to react faster to business change around the world."

That’s because the key to responsiveness is information. "Making sure the data is where it’s needed is only possible in a global information chain," he notes. "Only then can we talk about supply chain management, providing an easier, faster and more accurate way of doing business.

"In the fast-moving logistics industry, core services like warehousing or outbound and inbound transportation are no longer differentiating factors for companies," Herrmann explains. In recognition of this, Schenker is focusing its energies on adding new value to the business – for example, by more tightly integrating various aspects of the supply chain. This has involved implementing centralised systems such as a global air and sea freight information system, which helps provide greater visibility across the entire logistics chain. "We believe this gives us a competitive edge over other players in the industry," he says.

Although centralisation is pivotal to this strategy, overseeing and developing the infrastructure is too big a job for one person, so Schenker has a CIO for each of its regions, then a global CIO who ensures everyone is working to a unified vision, with consistency and continuity.

"Each region around the world has its own strengths," Herrmann says, noting that, if a global IT strategy is to be accepted rather than resisted, regional autonomy cannot be eliminated altogether. "The most successful way to work with the different regions is to guide them in the direction of the global strategy, while allowing them the freedom to apply their own cultural considerations."

Complete centralisation can also be risky from a business continuity point of view. "Having a single point of failure for a global system has to be handled carefully," he notes. "Logistics providers can’t afford downtime, so we need to ensure that our critical systems and communications network are continuously available, no matter what happens."

Schenker addresses this by working with communication partners on a worldwide level, which can also help when it comes to taking into account the different cultures and varying levels of technical progress across each of the company’s countries of operation - from Asia to Northern Europe, South America and Africa.

To this end, it has implemented Singapore Telecom’s ConnectPlus IP-based virtual private network (IP-VPN) to connect 87 sites across 14 countries in the Asia Pacific region. This includes 23 sites in China alone. "Because SingTel owns and manages the cables provided to us, any downtime is minimised, while quality of service is assured," Herrmann explains.

Aerospace defence contractor EFW is another international enterprise that depends heavily on global communications to link its operations around the world. It has numerous facilities in the US, as well as locations in Brazil, the UK, Romania and Thailand. Although the parent company is based in Israel, 40% of business comes from the US.

EFW’s business is so specialist that its design and manufacture experts are dispersed around the globe, placing great emphasis on real-time collaboration, and highly resilient and secure communication links between all of the company’s locations.

Although EFW has a global IT strategy, this is planned jointly between a CIO in the US and a CIO in Israel. "There is a dotted line between us, and then the other country CIOs report up to us," explains the US CIO, Max Horne.

"We are a grid of companies that work together, so we have to plan together to ensure that all the different entities are moving forward at the same pace. The global strategy is crucial, though. It enables the different locations to share information and work on programmes together, securely and in real-time," he notes.

EFW hasn’t always had a centralised approach, however. Five years ago, fragmented systems ran side by side. "Now we have standardised our systems across the group and can move the company forward faster as a result. We are now able to move between the manufacture and design of products more quickly, and transfer design authority more promptly. On some processes, the acceleration has been from weeks to minutes; on others, it’s months to days. Given that on-time delivery is a critical business target for EFW, these gains have had a substantial impact."

Because the aerospace defence market is shrinking, the environment is becoming more competitive all the time. Given that EFW’s target customers are companies with the pedigree of Lockheed Martin, Boeing, BAE, United Defense and The Government of Israel, quality and speed of delivery are everything.

Because every arm of the business now shares the same systems, EFW and its Israeli parent, Elbit Systems, can harness the skills of the best technicians and engineers around the world. Couple this with the speed-to-market advantage it has gained since standardising its technology, and it’s easy to see how the company has pulled off double-digit growth over the last five years.

"The technology is the easy part," Horne notes, however, explaining that people-related issues are the hardest to manage when consolidating and standardising IT across different continents. "There is a fear of loss of control when you start talking about sharing data and skills with an unknown group of people," he says. "This was the case with our engineers and production people. Overcoming this takes a lot of management time. It needed a lot of attention; we didn’t find an easy way around it."

Today, levels of trust are much better, mainly because everyone in the business has seen the benefits of the newer ways of working. "The change was driven by the top management, who understood the competitive advantage that could be gained by sharing resources, especially engineering group skill sets," Horne adds.

At a practical level, a secure VPN had to be implemented, linking all of the locations. "It was a big change," he notes. "It meant putting in a lot of system management tools (specifically, Computer Associates’ Unicenter suite), and standardising facilities such as support – we now have a single helpdesk for the business across the world."

This is managed internally, such is the sensitive nature of the content being shared across the network. "It’s not the sort of thing we could outsource as a managed service," Horne says.

Finally, wherever practical, systems have been consolidated at EFW’s main sites in Israel and the US. "If it’s in a data centre, it’s easier to manage, secure and backup," he notes.

If Horne has any pearls of wisdom to share about EFW’s move to a global strategy, they are about the importance of working out the processes, communications and training with users up front: "long before you start talking about IT tools," he says. "The cultural side of things is very important. You also need to establish the right balance between centralisation and retaining local autonomy – ie where centralisation will work and where it won’t – which may differ for each company."

David Lister, CIO of global information and news giant, Reuters, was brought into the company because of his experience of making exactly these kinds of judgement call. Before moving to Reuters 18 months ago, Lister had held senior IT roles at Diagio, Glaxo and most recently Boots.

With his background in overseeing large-scale IT change, on the back of mergers or global integration programmes, Reuters wanted him to help transform the business from a series of international operations to a unified global business - compartmentalised by business unit rather than by country. "This strategy reflects changes in the financial services market," Lister notes. "Our customers are much more global now, in the way that they are managed. The challenge for IT is how to support global processes, such as order management, customer service and financial management. Service delivery is critical too, as we now have to provide 24 x 7 support to those processes, as Reuters is never closed."

Lister has already made good progress. He has been busy implementing a follow-the-sun incident and problem management service, which starts in London, moves to New York, Australia and then Singapore as the different regions close or wake up. "Users of a global system must all be considered equally important," Lister says. "There is no longer a ‘central’ time zone."

Reuters operates in over 150 countries, employing some 16,000 staff. It has 500 internal IT staff, supported by a further 300-400 offshore and outsourced resources, used primarily for applications management. "Organisationally, we are now a single IT operation, which a single service delivery function, providing support for desktops to enterprise applications," Lister says. "We also have a single capability for solution delivery, where local application and solutions development have been pulled together to be looked after by a single team. This is based primarily in London, but with significant input from India."

For common processes, such as financial management and HR, Reuters has standardised on single applications, namely Siebel and Oracle.

So what regional and cultural issues did Reuters encounter when imposing its London-based practices on the global organisation? "Well, we didn’t have much choice about making the change," Lister notes. "A few years ago, Reuters faced a challenging time, because of the downturn in the financial services market. It needed a different model, to reflect the changes in the way FS companies were being managed.

"The most challenging part, actually, has been maintaining all the changes at the same level and pace, so that no aspect of the new model falls behind," he says. "For example, it’s no good having global applications if there is no global support model behind them. Similarly, we had to ensure the relationship management was in place to support out new model for application delivery. This needs a certain synchronicity."

And the key to success? "Great people," Lister concludes. "We have purposely recruited and developed a very strong leadership team – people who understand the new vision and how it operates." The second critical success factor is communication, he adds. "We run global teleconferences quarterly, involving every IS department from around the world, so that they can hear the plans and ask questions. We use some fairly advanced Cisco meeting technology to make these sessions very interactive."

Lister’s conclusions, as with Horne’s, concur with the findings of the CIO-Connect 2005 CIO Census - that the relationship between IT and the business, and communication of IT objectives, are fundamental to the success of major IT initiatives. (And, let’s face it, they don’t come much more major than the transition from a regional to a global IT strategy.)

Almost 90% of respondents to the annual survey claimed that ‘communication of the benefits of IT’ was a top priority, while 95% said working with other senior managers in implementing change was a chief concern. (This was to the extent that business-aware project managers were among the most highly sought team members by those actively recruiting for IT roles.)

So, not only has the world grown smaller, but strategic job roles are beginning to differ less and less from one side of the planet to the other. With globalisation, centralisation and standardisation top of the agenda, it seems disillusioned UK-based CIOs needn’t stop at a change of company to refresh their enthusiasm for spearheading their own personal IT revolution; for a real breath of fresh air, they could just as easily extend themselves to a change of country - or even continent…