The ability to communicate and complete processes electronically enables greater globalizing of business. But how does this affect the IS organization, and what action should CIOs take? We recently studied multinational enterprises – including BP, HSBC, Pirelli, Solectron, Southcorp and Unicef – to capture their key decision points for ‘glocalizing’, balancing global and local pressures.
It’s important to identify the balance between global integration and local responsiveness – from a business rather than an IS perspective.
To simplify things, we use just four predominant global business governance orientations. Each has an associated IS governance orientation that identifies the most appropriate location for IS processes and roles.
Assess your global business governance orientation
Global governance orientation refers to the desire to integrate globally and the need to maintain local responsiveness. A centralized business is heavily pressured to provide global integration, but less pressured to provide local responsiveness. A federated business is heavily pressured to provide both global integration and local responsiveness. In this model assets are usually highly coordinated. A parent-led business has medium to low pressure for both global integration and local responsiveness. In this model, most assets, apart from those associated with core capabilities, are decentralized. And a multi-local business is heavily pressured to be locally responsive.
Link IS macro-processes to global governance orientations
Grouping all IS activities into three macro-processes helps to sort out where processes should be located in different global governance orientations. The three processes are: driving innovation and strategy, delivering business change initiatives, and supplying and supporting infrastructure. Each IS macro-process can occur globally or locally, or in a mix of locations.
In centralized businesses, all three macro-processes are centralized. In federated businesses, the ‘driving innovation and strategy’ and ‘infrastructure supply and support’ processes occur both globally and locally, while ‘delivering change’ happens locally. In multi-local businesses, all three IS macro-processes are handled locally.
Link IS roles to global governance orientations
In Gartner Executive Program’s previous work we identified five roles crucial to all IS organizations, no matter how IT services were delivered: IT leadership, architecture development, business enhancement, technology advancement, and vendor management. These roles can be mapped onto the four global governance orientations to identify their best location.
In centralized businesses, all roles are centralized except ‘business enhancement’, which is mixed. In federated businesses, all the roles are mixed except ‘business enhancement’, which is local. In parent-led businesses, the ‘IT leadership’ and ‘architecture development’ roles are centralized, where possible, while ‘business enhancement’ and ‘vendor management’ are mixed, depending on circumstances. In multi-local businesses, all IS roles are handled locally.
As a generalization, the IS processes and roles in a multinational business should flow from the parent governance orientation. Or, more specifically, they should flow from where the enterprise is moving to, rather than reflect enterprise history.
Beware the Murphy factor
Be warned – logic and rationality can only get you part of the way to working out where and how to locate your IS processes and roles. A number of constraints and leverage points introduce uncertainties:
- The business mandate autonomy profileDiversity of the countries in which the business operatesThe IT maturity of the countries in which the business operates
Businesses with a history of autonomous local units have difficulty globalizing and standardizing. They can do so through corporate mandates or socialization. But mandates really work only where there is a strong focus on and history of control. Socialization takes time, lots of face-to-face dialog, and collaboration mechanisms.
Globalizing businesses also need to accommodate the diversity of the countries in which they operate – in areas such as political environment, business culture, legal structure, overall economy, public infrastructure, and market structure.
The third constraint, or leverage point, is the IT maturity of the countries where the business operates. IT maturity can be measured in many ways: degree of telecom deregulation, PC penetration, Internet connections, penetration of fibre optic cable, IT investment, maturity of the IT services market, and IT market attractiveness.
Dr. Marianne Broadbent is Group Vice Presicent and Global Head of Research for Gartner’s Executive Programs.