When CIOs think about enabling global expansion of their enterprise, the G-word comes quickly to mind: governance.
A big CIO fear is that IT decision-making, oversight, even simple visibility, will quickly become a muddled mess without a foresighted and careful global governance structure. When CIO Executive Council members collaborated to create a Globalization Playbook last year, governance was a significant section.
The fundamental consideration in global governance is the control model. That is, does IT authority reside centrally, locally, or is it a combination of the two? There is no perfect governance model for global IT; tradeoffs are inherent. One model that works at a certain stage in a company’s lifecycle may be ill-fitting at another stage. However, most of the CIOs interviewed for the Council’s playbook use a central control model, placing all of their IT governance authority at world headquarters. That means the corporate CIO and senior leadership team are responsible for decisions such as IT strategy, project prioritization, system selection, application development methodologies and so on. Companies in cost-cutting mode will often gravitate to centralization, seeking to minimize duplication of effort at the expense of local customization.
When significant local control is permitted, the model becomes a hybrid, where enterprise standards and global systems are controlled by the central IT authority, but local IT management is responsible for selecting and managing some systems, such as customer relationship management.
A distributed model puts nearly all authority for what projects IT tackles and what systems are adopted at the local level, perhaps with some financial support systems or e-mail provided by world headquarters IT. Local, decentralized control was the least used governance model among the Council sources, though often it is the de facto model as companies grow organically in diverse regions or through acquisition.
One simple way of thinking about the model choice is “centralize for efficiency; decentralize for effectiveness,” says Michael Pilkington, former CIO of Brussels-based Euroclear SA/NV. When considering a global IT governance model, it’s key to understand the operating model of the business you must support and enable. Is the operating model globally, regionally or country-oriented? Does the company care about alignment across regions? At Motorola, for example, alignment is critical, says Cathie Kozik, corporate vice president of supply chain IT. “Leveraging solutions across the global organization and not recreating the wheel is important to us.” Motorola has gravitated toward centralized IT governance.
Focusing on IT processes can also point to the best governance model. Weigh IT processes in terms of which are truly core to your business – project management, process specialization, infrastructure support, application development and support. Could your core processes or standards be controlled centrally? Could they be executed according to local needs? Could your non-core processes be locally managed?
For Claudio Abreu, CIO of corporate and business services for Bayer North America, strategy and core processes must always be the same globally. However, the strategy should always be executed in a way that makes sense for the location, a trademark of the hybrid governance model. “We don’t believe in ‘remote control’ on day-to-day operations,” says Abreu.
Decision-making culture must also be a factor. How virtual is your business’s existing culture? Where does the business’s thought leadership and direction come from? Is it all from one place? Is it through a council made up of leaders from a variety of units? How does the business get its collective wisdom? Local IT autonomy may fit naturally well into a culture where decisions already arise from input that comes from beyond the walls of headquarters.
Another consideration is location. Where will you be locating staff? Consider the local and regional HR laws of these locations, for they will impose some parameters on, or exceptions to, your governance model. Also, are there unique strengths in a particular culture or country you could leverage? Region-specific centres of IT excellence could be a useful approach to build into any governance model.
UNIVERSAL BEST PRACTICES
While each governance model has specific best practices and potential pitfalls associated with it, there are several must-dos that apply to any global governance model.
Involve senior leadership. Senior leadership from all your regions, including the smallest ones, should be part of the governance model decision-making, advises Bayer’s Abreu. Through involvement, you will lessen any feelings of disenfranchisement and encourage better acceptance of the final model.
Be appropriately flexible. No matter what model you choose, it’s important to be flexible to a degree. Organizations often doom the success of their model by going to extremes, says Abreu. Push too much customization, and costs skyrocket. Or force an absolute centralized standard or practice without taking the local market or culture into consideration, and you get backlash. “There will be backlash or failure because it won’t work or won’t be accepted,” says Abreu
Maintain visibility into remote IT. Make sure the CIO and senior leaders have strong visibility into local IT for oversight/control and to identify collaboration opportunities. Within FedEx’s IT organization, CIO Beth Galetti holds quarterly best-practice forums in each region for each IT function. This helps with the dissemination of knowledge and quality IT practices among multiple countries. Galetti also relies on boards made up of business function heads from each global region to gain visibility into major projects being proposed across FedEx, as well as the business needs and plans for each region. The review boards examine all IT projects that require more than 40 hours of development work.
Leverage tools for resource insight, communication and collaboration. Simple applications, such as time reporting and project tracking tools, can provide significant insights into local IT resources. A foundation built with communication and collaboration tools is also helpful when staff and ideas are spread across many time zones and continents. For example, ON Semiconductor adopted collaboration tools NetMeeting and SharePoint to enable its widely distributed IT staff of 325 to share information and keep initiatives moving globally without having to use videoconferencing.
Energy company Hess Corp. has been using SharePoint across the entire company for several years, is starting to roll out instant messaging and is evaluating ways to do more than standard teleconferencing or videoconferencing. To that end, Hess is considering telepresence systems such as Cisco’s TelePresence and Hewlett-Packard’s Halo Collaboration Studio. Halo is a virtual collaboration technology in which a studio is set up in a company’s office such that the entire environment (people, background projections, notes and more) is transmitted from location to location and Halo room to Halo room instead of just the scene directly in front of the videoconferencing camera.
Such technologies can facilitate international collaboration, but not without defining good collaboration processes first, warns Hess CIO Pete Walton. “I strongly believe that rolling out collaborative technologies in a company culture that doesn’t know how to collaborate is a recipe for CIO failure,” he says. “The best technologies in the world can’t force people into unnatural actions.”
Richard Pastore is managing director of content and events for the CIO Executive Council.