Should You Go Global?
Many companies with an international information technology (IT) presence are at various phases of "globalizing" IT. They are attempting to streamline their world wide applications, data, and data flows. Common tactics include moving to common global systems (ERPs), sharing data between multiple regional systems (integrating), or at a minimum efficiently consolidating key information utilizing a data warehouse. Additionally, there are companies out there that are still passing spreadsheets around the world to try to get the information needed to run the global enterprise. Most enterprises utilize a mix of the above.

Some of the drivers in the move to global systems are a more global view of business, a competitive need for consolidated worldwide information, the emergence of globalized ERP packages, improved infrastructure including higher levels of global infrastructure standardization and reliability, the Internet, and a significant reduction in international telecommunications costs.

The answer to the question "Should you go global?" for most corporations doing business in multiple countries is yes. The increasingly global nature of business is driving a need for timely consolidated information that sooner or later will require "global" systems. The issue is what mix of "tactics" is best for your global enterprise, keeping in mind that IT organizations are tasked first with keeping the systems up and available. Only if there is extra time and resources can IT effectively move forward in a coordinated, cost effective manner.

You Need a Global IT Strategy
A key challenge will be coordinating the ever evolving requirements of the international IT organizations and focusing the entire organization on enterprise level goals. With today's tight IT budgets and overworked staff, focusing on strategy, particularly a world wide IT strategy, frequently drops to the bottom of the priority list. However, without an agreed to global IT strategy, systems evolve in isolation, which increases the complexity and ongoing costs of obtaining consolidated information.

Creating and executing a global enterprise systems strategy is a major undertaking, requiring a significant amount of discussion and negotiation. International business and IT managers are frequently fighting for local projects and they are after the same budget dollars. Without a common vision it is very easy for the international units to move to a competitive rather than cooperative posture.

Unfortunately there are no easy answers, no formulas, as to how to move forward with a global IT organization. Every business is unique in its business strategy, business requirements, the effort required to get to coordinated global systems, and the anticipated benefits of going global. There is, however, a process that can be utilized to create unique business strategies, which will be covered in a follow up article.

Just a Few of the Issues Unique to Global Efforts
Many of the issues that must be considered are not unique to global organizations. However, there is an additional level of complexity with a global organization. Contributors to the complexity include dealing with multiple local business models and go-to-market strategies, multiple languages, multiple currencies requiring conversion, multiple cultures, time zones, infrastructure availability, and support availability (24x7is generally required).

Global Business Strategy and Organizational Structure - Hierarchical Centralized vs. Loose Confederation:
Organizations with a very centralized structure are much more likely to be open to moving to common systems. This is particularly true of hierarchical centralized organizations (or business functions). This type of organization may already have common processes, forms, and reporting structures that simplify the requirements of a centralized global system.

Companies that run their international organization as a loose confederation will have a more difficult time in both determining requirements and convincing people that centralized systems are needed (and in some cases they may not be). In this situation a "best of breed", integrated model providing a great deal of "localization" may provide a less complex and more cost effective strategy. Loosely coupled organizations will probably not require as much consolidated data and may be just fine rolling information up utilizing a data warehouse. The disadvantage to most data warehouse solutions is that sooner or later someone wants to drill down into the data, which can be extremely difficult with multiple systems feeding already consolidated information.

Markets and" Go To Market" Strategies:
Companies with strong global branding may more easily be able to leverage world wide systems. This is particularly true for customer facing systems, which are largely now Web based. Examples of strongly branded products would include many of the internationally distributed food and beverage products, fast food, and strongly branded manufactured equipment.

However, even with a strong brand, the local markets may impact the need for localized vs. global systems. Take for example the outboard engine market. Some areas use the motors primarily for recreation. In other parts of the world livelihoods depend on the motors as they are used primarily commercially. In the same industry there are also differences in parts distribution. In the USA and other parts of the world with high labor rates, there is a market for replacement parts sales to individuals for the "do it yourselfer". In countries with lower labor rates, the "do it yourself" market is virtually non-existent. Web access to parts information and on-line purchase options might not add value in low labor rate markets.

Multiple Languages:
Even though multiple languages may be used by the various business entities, the global business model may or may not require that all applications be provided in all languages. With the exception of truly multilingual software products, the more languages that are required the more complex the implementation and the more costly the system will be to both implement and support.

Looking at three examples of business need for multiple languages demonstrates how business strategy can drive systems needs. A major electronics manufacturer made the decision to keep all information in a single language, English, when implementing their global system. They could do so because all of their employees were required to be fluent in English. Avoiding the challenges of multiple languages simplified the effort involved in both rolling out and supporting their ERP implementation. A second firm in the hospitality industry made the decision to leave all of the computer screens in English, as their employees understood English, but as their business required that customer facing documents be delivered in the local language, all external printed documents were provided in the local language. A third firm in the fast food industry, where English was not necessarily understood globally, needed to provide both screens and output in the local language, which added a much higher level of complexity to the implementation and ongoing support of the system. Each of these firms was dealing with different situations and drivers when balancing business requirements and IT budgets.

Multiple Currencies
At first brush, currency conversion should be easy. It's just a formula. The complexity comes in determining the frequency of conversion, the source for the exchange rate, and following all of the regulations from the various countries involved on transfer of funds. For some applications, currency conversion will best be done immediately, for others a wait of a week or a month may be acceptable.

Local Regulatory Requirements
Country specific requirements such as accounting standards, tax structures, regulatory reporting, and import and export requirement also add an additional level of complexity for global systems. And regulatory requirements may change rapidly. In some instances, in-country requirements will more quickly and cost effectively be handled utilizing in-country software and interfacing to and from the global systems, as necessary. Even more complex is keeping up to date on tax requirements. Taxes are particularly challenging for companies selling to multiple international locations and for those with distribution facilities in multiple countries. Global tax software is available, but it must be constantly maintained and may not cover all international locations.

Infrastructure:
For infrastructure, the news is generally good. Telecommunications capabilities worldwide have improved and the prices are down. The Internet is providing new ways of transferring information. PCs have evolved to relatively easily accommodate multiple languages. However, a review of infrastructure is still critical. Some areas in the world can only be accessed by satellite. Other areas may experience serious issues with "the last mile". Different levels of sophistication in technical infrastructure (and no the USA is not always ahead of the curve) may impact what is viable. And don't forget the people factor. Some individuals are still not comfortable in a computerized world.

One of the worst horror story in circulation involved a Web based business located in a tropical paradise. Unfortunately, the line speeds were such that they had to shut down the business and relocate to another country, causing significant business disruption and escalating start-up costs.

Balancing Functionality and Budget
Determining direction and pace of movement will involve balancing business needs with financial considerations. Unfortunately, in a global enterprise, business needs may vary. Even though it may be more efficient from a corporate standpoint, a global system may not provide a more cost-effective solution than running multiple localized systems around the world.

With one ERP implementation the original plan was to implement first in Brazil as the systems there were in need of replacement, it was a smaller office, (think beta), and the time zone was similar to the North American parent IT group. However, detailed research determined that the business volume in Brazil could not justify the expense of a major ERP implementation. It was simply over kill. Anyone familiar with Brazil will be aware that their accounting and reporting requirements are relatively unique and very complex. The revised solution for Brazil involved creating a custom in-country system that was then linked to the corporate systems. A cost effective solution geared to the needs of the business community.

If legacy processes and systems are in place, there is a need to determine what localized functionality will be lost with the potential move to a global system. The next step is to determine how critical the functionality is to the business. Multiple solutions exist including changing processes and using bolt-ons to provide critical functionality.

In reviewing a client's global manufacturing process, one of the manufacturing facilities had optimized their inventory by going to supplier owned inventory with key vendors. Although the inventory was on the client's site, it was the property of the supplier until it was used. The process for procurement, payment, and accounting are quite unique in this environment. The ERP system that is being installed domestically could not support supplier owned inventory as a part of the entire supply chain. However, from a business standpoint having the supplier own the inventory was a cost effective strategy that significantly reduced inventory costs.

As Always, Success Depends on the People
It's the people who determine how effectively an organization can create and execute strategy. Even with a common vision, it is difficult to keep a global organization focused. Global organizations face the unique issues of dealing with differences in culture, language, time zones, and business priorities.

Constant communication between groups is critical and some of that communication must take place face to face. With the increased use of teleconferencing, voice mail and e-mail, it is easy to forget that it is relationships that make things happen. Building those relationships is critical. With the increasing use of virtual global teams, the tendency is to not bring the people together, given the time commitment required for travel and the cost of shipping people around the world. Not providing adequate face time is costly mistake in the long run. People need to establish relationships before they can truly function as a high performing team.

Every member of a global team must also be sensitive to cultural differences. In an era when you see the same chains in all major cities, it is difficult to remember that there are basic cultural differences in how business and personal relationships are conducted. We in the USA can have a tendency to assume that all cultures operate as ours does. However, individuals in the USA don't even conduct business in the same manner. Sensitivity to the norms of other cultures is critical and project team members who do not appreciate other cultures are not nearly as effective as those who do. One global enterprise that was an early adapter of global systems was smart enough to institute cultural sensitivity training for global project team members. Another colleague from a large global manufacturing firm even suggested that all potential global project team members should have at least 2 stamps in their passport before they are considered for the team.

In the age of outsourcing, the challenge of managing a global team may become even more difficult. The outsourcing firm may or may not have the same vision and goals as your organization. Communication, effective management and monitoring become even more critical.

Conclusion
Given the pros and cons, is going global worth it? Is this the best place to utilize scarce business and IT resources? Is now the time? Each company must make that determination based on business priorities. If the overall answer is yes, proceed, but don't forget to continually monitor for changes in the global enterprise environment. If now is not the time to go global, don't throw away your research. Going global for many organizations is just a matter of time in our rapidly shrinking world.

Bio:
Caryl M. Barclay is an international IT executive with over 20 years of experience integrating business and IT strategy, process design, technology, and organizational change management. She is the President of Usable Systems, Inc., an IT consulting firm specializing in Global IT and Organization Focusing. Prior positions include Director of International IT for Outboard Marine Corporation and Principal, Computer Sciences Corporation. She holds a BA in Psychology from Stanford University and an MBA in Finance from the University of Chicago. She can be reached at caryl.barclay@usablesystemsinc.com. The firm's Web site is www.UsableSystemsInc.com.