IT Globalization Examples — Drivers, Hurdles, And Opportunities.

IT Globalization Examples — Drivers, Hurdles, And Opportunities.

Most firms pursue globalization to improve business performance.”

CIOs are increasingly pursuing globalization in support of their firms’ efforts to attack new markets and achieve greater efficiencies. But globalization is both an emerging and complicated change, and there are no signposts to tell firms which way to turn.

Forrester has previously characterized the types of changes CIOs should pursue in their efforts to globalize — balancing global and local needs through IT structures and processes, especially around applications and IT’s strategic functions. This report provides examples of how firms are globalizing — what works and what doesn’t. To achieve successful globalization, IT must move in parallel with the business — incrementally adopting structures and processes that enable the global-local balance.

IT TURNS INCREASINGLY TO GLOBALIZATION — EVEN IN THE DOWNTURN

Forrester’s CIO customers are increasingly interested in globalization, as their firms seek to improve operations across geographic and organizational boundaries and pursue goals that span those borders. Many firms are already on the path to globalization — and many more are just beginning to tackle it — but none that Forrester interviewed for this report has achieved full maturity with a global model yet. Why is that? The transition from a coordinated worldwide organization to a global one requires a significant increase in IT’s structural and operational complexity, as CIOs seek to:

• Realize savings and respond more quickly to new opportunities. Most firms pursue globalization to improve business performance — looking to take advantage of new markets, leverage internal capabilities across the enterprise, or source goods and services from partners around the globe. But to do this, IT faces challenges that multiply as greater synergies are gained — challenges such as balancing standardization with agility, addressing both global and local requirements, responding quickly to change, and driving ongoing innovation.
• Accelerate out of the downturn. Stronger firms look for global alternatives — not all markets for products and services are suffering the same level of decline, and partnerships that fail in one geography can be replaced by healthier firms in other locations. And weaker companies are looking to globalization as a means for building momentum that will help accelerate them out of the downturn — like a revenue-strapped US manufacturer investing in China-based sales to take advantage of that country’s relatively healthier business environment.

Examples Show What Works — And What Doesn’t

Forrester characterized the end state IT must achieve to succeed in research published earlier this year. Global IT organizations have a lot of work to do to meet their firms’ globalization requirements. To help create a richer understanding of what global IT can do, this report provides examples of firms in which IT is globalizing. These examples come from Forrester’s ongoing work with CIOs, including IT assessments, workshops, and education sessions. The names of the firms in these examples have been withheld and the company characterizations are blurred to hide the identity of the firms.

The bottom line: IT’s efforts to operate across geographic and organizational boundaries have to closely match the globalization pace of other business organizations. Central IT clashes with distributed business units when goals aren’t aligned and business structures don’t support IT’s cross-unit efforts. To avoid this mismatch, IT organizations must pay particular attention to a global-local balance around applications, strategic IT functions, and IT’s structures and processes. This message is borne out in the following five examples:

• A large consumer goods manufacturer globalizes for efficiency. This firm has moved as far up the globalization curve as any other firm Forrester worked with for this report. Business and IT have moved together, creating globally consistent business processes and organizations supported by common applications and operations provided by global IT. These efforts have delivered significant global efficiencies. But this firm’s local business and IT organizations each reinvent processes and technology as they pursue sales, marketing, and local distribution. Global IT and business have yet to find a way to enable their local counterparts to leverage the work being done by other local entities.
• A very large industrial firm’s centrally defined processes transform key activities. IT has led business in the globalization effort, gaining efficiencies and consistency as the two have worked together to leverage increasingly common business processes that span the globe. And while business operations have achieved award-winning efficiencies, the use of legacy technologies limits agility, making it difficult for both business and IT to continue to drive changes around the world.
• A very large consumer goods firm globalizes to drive increased financial performance. The business drove the initial move to globalization in this company, looking for efficiencies and better recognition and response to emerging opportunities. But IT has caught up and is enabling new levels of global synergies as the CIO brings business and IT close together in a global shared services organization. While this is a work in progress, the efforts of this firm are similar to those in other large consumer goods companies where local market opportunities require unique capabilities, but there is much that is gained by enabling local units to leverage other units’ successes.
• A large aerospace-defense supplier fails in its attempts to globalize. Not all efforts at globalization succeed, and this becomes painfully clear when IT’s globalization model reached beyond the business’ commitment, resulting in shadow IT and corporate programs that weren’t implemented. In this company, IT was pursuing a globalization mandate that wasn’t supported by the business organizations. As a result, IT has backed off from its aggressive globalization, engaging the distributed business groups in shared efforts that incrementally leverage the firm’s dispersed resources.
• A CIO’s efforts in an industrial manufacturer yield results that will be lost over time. The corporate CIO in this firm was given a charter by the CEO to create global synergies across independent operating units — and he has accomplished significant results, creating both business and IT synergies around the globe. But because the CEO has not chartered the individual business unit managers with globalization and has yet to establish global ownership and management of any business or IT processes, the gains the CIO has made will persist only as long as it suits the individual business units.

IT GLOBALIZATION FOCUSES ON IT’S STRUCTURES, PROCESSES, AND RATE OF CHANGE

The examples in this report present how IT’s efforts fit within the business context by globalizing. They show that:

• IT’s organizational structures have to parallel the business’ global charter. Where IT staff are located and how they report determine how effective IT globalization will be, particularly relative to the global-local balance of these resources.
• IT’s processes need to be well-defined and consistent across the enterprise. IT process ownership and participation across IT’s global and local structures provide the fabric that makes IT’s organizational structures effective.
• IT should incrementally build the required structures and processes. IT’s steps to a global model should occur incrementally as both IT and business shift their structures and processes to accommodate the new mandate.

IT’s Organizational Structures Have To Parallel The Business’ Global Charter

In these examples, success is being realized through parallel movement of IT and the business — no matter who takes the lead, the CIO or other executives:

• IT’s relationship managers match up with the key business leaders. In the first example, IT has a well-defined structure of relationship managers assigned to global, regional, and local business organizations. This helps to create business trust that IT knows what the business needs and keeps IT well informed about what the key business issues are.
• IT has business process leads who work closely with their business counterparts. By having senior, global business process leads, IT in the second example runs integrated programs that both meet the specific needs of the business execs who own these processes and coordinate across the local units to help assure the local success of the global programs.
• Global services require both business and technology. The CIO in the third example has brought the business and IT resources required to deliver global services into a single organization, assuring that the structure meets the firm’s global needs — and not just those of either the business or IT.

IT’s Processes Need To Be Well-Defined And Consistent Across The Enterprise

Firms seldom structure their organizations based on the processes that they execute, making the effectiveness of globalization highly dependent on the processes that IT and the business execute.

• Global IT has to define common processes to be adopted across the firm. The larger and more complicated the business problem, the more the firm depends on common processes. In the first example, IT’s strong focus on common change management creates the transparency and control required to assure consistency across the enterprise.
• Business processes form the foundation for global efficiencies and agility. The focus on enterprisewide business processes in the second example has yielded efficiencies consistently around the world.
• Managing IT and business processes together yields service value — not IT value. By bringing IT and business together in a single structure, the CIO in the third example is beginning to produce business results based on technology — not just technology results.

IT Should Incrementally Build The Required Structures And Processes

The movement toward globalization has been executed step by step in all of the firms Forrester has worked with for this report.

• Process globalization should occur along with the structural changes. The firm in the first example transitioned the business organizations to the global format just before it rolled out the global business and IT processes. This occurred as an incremental rollout of a new ERP system that implemented the processes for the new business structures to use to operate the incrementally global business processes.
• Many firms globalize process by process. It’s common for firms to first globalize processes associated with the finance and HR functions — especially procurement. The firm in the second example has used this approach to simplify the otherwise complex changes to the firm.
• New ways to globalize will continue to arise. Globalization is not a well-trodden path with clear signposts to identify best practices. The firm in the third example has tried multiple models as it moves toward global efficiency and agility.

WHAT IT MEANS

SUCCESSFUL GLOBALIZATION: AN ONGOING CHANGE — NOT AN END STATE TO ACHIEVE

None of the firms represented in these examples has achieved globalization — and maybe they never will. Globalization’s level of complexity and the continuing emergence of opportunities around the world will continue to favor a balance of both innovative agility and stability. As a result, CIOs should work with their business peers to:

• Make review of global opportunities an ongoing activity. Knowing today’s possibilities won’t necessarily hold tomorrow — as the current recession is showing us all too clearly. It therefore behooves globalizing firms to keep their eyes on the ever-changing nature of competition, opportunity, and innovation. And by taking a services approach to both business and IT, companies can change, add, and remove business capabilities as they decide to change course.
• Test and adopt new structures and processes. As globalization requires ongoing attention to change, the successful global firm will keep adopting new ways to do business that take advantage of the new global realities — just like what the CIO in the third example is doing. And firms can look to partners to provide much of these new structures and processes when they operate as Digital Business Networks, adopting services provided by others to create time-to-benefit with lower risk.