Analyst Outlook: Gently does it in emerging markets

Emerging markets represent the next big growth opportunity for global enterprises. But while few CIOs are heavily involved in choosing which emerging market, if any, their enterprise expands into, almost all are expected to play a critical role in ensuring the venture’s success once the decision has been made.

Worse still, usually there are only a couple of months, not the years it normally requires, to have an operation up and running – in a language they don’t understand, using local staff whose capabilities are still be to tested. Welcome to the emerging-market CIO club!

When you’re investigating how to set up IT in an emerging market, it’s useful to consider that each market has four country characteristics.

The first characteristic, technology, applies to the condition of the country’s IT infrastructure. The power grid can often be unreliable, the country can have a low level of Internet penetration, and it may have immature telecom providers and services. The advantages might be that global IT vendor products and support are available, and there is no legacy infrastructure to replace.

The second characteristic involves laws regarding IT workforce, language and data transfer. These laws may not protect data privacy, import and export of technology, intellectual property and capital. But the advantages could be that the existing labour laws favour global corporations, allowing lower cost of market entry and exit.

The third characteristic concerns culture. The most obvious challenge is that language and communication styles vary greatly by country, as do IT usage behaviors. The advantages might be that hierarchical, top-down cultures often resist new technology less and show less attachment to old technologies.

The fourth and final characteristic involves the workforce. The challenges: dearth of skilled IT people who know both technology and the enterprise’s official language. The advantages might be that the workforce comprises highly motivated, diligent and educated employees with entrepreneurial attitudes and a desire to gain new IT skills and participate in new opportunities.

Implement standard versions

When setting up shop in an emerging market, most CIOs used standard solutions as far as possible, while making allowances for the local culture and environment. Allowances are made by using only the required modules of the standard systems and tailoring them as little as possible.

But the technology decisions are easy; it’s the organizational ones that are hard. Understanding cultural issues greatly enhances the chance of success in an emerging market. The three common cultural levers include relationships, communication and work habits.

Relationships often play a more critical role in emerging markets than in high-income countries. Identify key stakeholders, such as local and regional legislators, country business managers and local office staff who can wield influence and garner support.

The difference between “what is said” and “what is meant” determines what actually gets done. Rely on training, experienced colleagues and local staff who can assist you.

Learn local customs that may influence IT implementations or the business overall. Decide which customs you must respect or participate in, and which require revisiting to help the emerging market contribute to the global operation.

Savvy CIOs modify the project plan to fit the emerging market culture in five ways. They budget more time to understand how to get things done in each new emerging market. They budget less time for installations because the cost of labour is less in many emerging markets, and the supply ample. They budget more time for business-process training. They budget less time for engagement and buy-in by IT staff and users. Because many emerging market countries have a hierarchical culture, they are less likely to challenge leadership direction; they are also less likely to offer suggestions to improve the use of systems. And lastly they budget more time for application development due to language translation.

The CIOs interviewed for this research represent decades of experience. They advise their peers not to underestimate an emerging market. No two are alike. The role of the CIO is to understand the differences and how to strategically position IT for the emerging market, and as part of the enterprise as a whole.

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–Andrew Rowsell-Jones is vice president and research director for Gartner’s CIO Executive Programs.

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