Global business services net big returns

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, managing promotional funds for retail customers, P&G had 55 different systems in place. Over the past four years, P&G has gradually increased 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 in locations ranging from Europe to 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 he says, "when they were ready."

Evangelizing is critical, says Webb. "You need to spend a lot of time socializing why the change is a good thing," he says. "And even when people understand it, they will be resistant if it affects their business." 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.

He advises CIOs 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. 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, says Fortner. "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." 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."

Five steps to IT globalization

P&G's Approach

1. Consolidate infrastructure.

2. Centralize services.

3. Standardize applications.

4. Optimize business processes.

5. Move toward strategic sourcing.

IDEX's Approach

1. Consolidate onto a private cloud infrastructure.

2. Globalize core enterprise network services and applications.

3. Standardize business processes.

4. Establish common front-office systems and other software platforms to enable integration of business units that sell into same markets and to create collective synergies that will help increase revenue.

5. Transition in stages from a federated structure to a multicultural, virtual IT organization that's centrally managed but dispersed globally so as to be close to each business unit.

Robert L. Mitchell is a national correspondent for Computerworld. Follow him on Twitter at twitter.com/rmitch, or email him at rmitchell@computerworld.com.

This story, "Global business services net big returns" was originally published by Computerworld.

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