Moving standardization efforts beyond core applications is where things can get sticky. IT must strike a balance between what should be consistent across the company and what needs to be differentiated -- a process that Bessant calls "paint-by-numbers vs. Picasso."
"We try not to create a Picasso every time we undertake development, but not every project fits the paint-by-numbers approach," she says. In the end, differentiated applications are allowed only where absolutely necessary to the business. And all applications must follow standards -- for example, they all must have the ability to support multiple currencies from day one, instead of building for the U.S. dollar first and adding support for other currencies later.
At P&G, the battle was just beginning after core applications had been centralized and consolidated, says Passerini. With 99% of core applications on the global SAP system, the CIO turned his attention to all of the other applications used in the business and was surprised to find that only 27% were standardized. In just one area -- the management of promotional funds for retail customers -- P&G had 55 different systems in place. Over the past four years, P&G has gradually increased its overall standardization rate to 80%, and Passerini says he expects that figure to eventually hit 100%.
Other businesses may find that some applications must remain local, says Cameron. Sourcing, manufacturing and distribution planning often go global, while the sales, marketing and final distribution functions frequently remain local. "That local-global balance is the magic," he says, but it's often more of a political problem that needs to be solved, rather than a technical one.
The final step at IDEX, Kamath says, has been to build a global virtual organization -- a multicultural team that's distributed geographically in order to stay close to the customer, but that reports back to the central shared services organization. The virtual team has staff members in a range of locations, including Europe, China, India and Canada. "They need to be dispersed geographically, to be able to work independently and to be able to work with individuals from different cultures," Kamath says.
At Equifax, Webb's team carefully considered which roles would move to headquarters and which needed to stay local. "The relationship management piece, project management, business analysts and requirements analysis need to stay in-country," he says. "All of the rest can be questioned and analyzed for globalization."
IT's Sales Job
The process of globalizing is as much about management as it is about technology, IT executives say. And no IT globalization effort will succeed unless IT can show an immediate benefit to the business. "You cannot force standardization now with the promise that five years from now the world will be better," Passerini says. "The business must understand the immediate return as well as the good that comes later. Always start with business-relevant, concrete benefits that your business partners can see, feel and touch."
P&G built up its shared services business by clearly articulating the business benefits that line up with the company's strategic business goals, he says.
Kamath agrees that globalization initiatives can't just be dictated to business unit leaders. At IDEX, every operation moved into the private cloud infrastructure -- a step that was transparent to the business -- but Kamath took a more measured approach to transitioning each business unit onto the new application platforms. The platforms delivered clearly understandable business benefits, but each unit came aboard "when they were ready," he says.
Evangelizing is critical, Webb notes. "You need to spend a lot of time socializing why the change is a good thing. And even when people understand it, they will be resistant if it affects their business," he says. Change is disruptive, and having multiple initiatives happening in parallel compounded the problem at Equifax.
Any successful globalization initiative must have the CEO's unwavering support, but it is important to understand that the CEO also has made a commitment to help each business unit meet its goals. "They're focused on top-line growth, and many of these solutions have the potential to get in the way of meeting their goals. You get a lot of pushback," Webb says.
CIOs have to be patient and realize that they must strike a balance between accomplishing their goals with globalization and being sensitive to the fact that business unit leaders need to meet those P&L targets. "You have to have the flexibility to slow down and work with the business when things happen," Webb says. "We've gone through multiple iterations of thinking we know where we want to go, and then something comes along and derails it."
To maintain support once shared services have been established, and to avoid having business units go rogue, a global IT shared services organization must be highly responsive, Fortner advises. "How do you govern standardization to prevent a creep-back to everyone wanting their own things? You need to run like a business and be so good that they won't want to go elsewhere," he says. At P&G, the business units rate the Global Business Services group's performance every year. When the rating system was first adopted 10 years ago, Global Business Services got a score of 6 on a scale of 1 to 10. "We're over a 9.0 now," Fortner says. "Running as a business has forced us to be competitive."
Getting started means overcoming corporate inertia. "The thing that holds people back is the lack of a bold, compelling need to change," Fortner says. "You get stuck in the old business model, and country managers will want to do it their own way. They have to trust that your organization can come in and do it better, faster and cheaper."
This version of this story was originally published in Computerworld's print edition. It was adapted from an article that appeared earlier on Computerworld.com.
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This story, "Globalized IT operations pay off" was originally published by Computerworld.