NW200: When vendors promise the world

By Julie Bort, Network World |  Software

The message from the Japanese office was a shocker. The global license for customer relationship management software painstakingly negotiated by a Charles Schwab IT executive had been declared invalid there.

Although affiliated with its U.S. counterpart, the Japanese CRM vendor was a legally independent entity -- something the U.S. vendor failed to tell Daniel Keller, senior vice president of global technology for Schwab in San Francisco, when he contracted with it to deploy software in seven offices in five countries. Because Schwab's global license didn't include an appended contract directly with the Japanese CRM vendor, that vendor claimed it didn't have to honor the global license. Instead, it demanded that Keller buy another license just for Schwab's Japanese operations.

In the end, Keller decided it was less expensive to go with another CRM vendor in Japan. His advice is brush up on your vendor's corporate structure and your legalese before signing on the dotted line.

And understand that a global license only applies if a company has more than 51% operating control of a joint venture, he adds.

For Michael Brady, first vice president of global networking services for Merrill Lynch in New York, the international vendor-management shocker was trouble-ticket resolution. When a network component in France failed, the vendor executing his global service contract pooh-poohed quick action. The vendor dismissed emergency calls from New York as American overreaction and impatience.

"Even in a country as sophisticated as Spain or France, getting faster time frames than is considered usual for the culture is very difficult," Brady says.

Brady countered by hiring a French expatriate to work at U.S. headquarters as the liaison to the overseas vendor. With the help of someone who spoke the language natively and understood both cultures, the vendor finally realized that speed is everything when it comes to stock trading.

These are two classic tales of troubles IT managers face over globalization. As increasing numbers of U.S. companies expand overseas, IT executives are finding just how difficult integrating far-flung offices can be.

"Getting leverage overseas where we're in smaller offices is extremely difficult. We simply get more buying power and attention in the U.S.," says Mark Kissman, CFO of Current Analysis, a consulting firm with offices in eight countries.

Vendors preach that their globalization is your salvation and, in some respects, the claim is true. A vendor with multinational sales offices and offshore manufacturing facilities can help you outfit international sites far better than those with only a U.S. presence. They can save you money by sourcing locally and time by servicing devices on-site.

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