Global business services net big returns
By interlocking business services, companies gain customer knowledge, efficiency and speed. The payoffs are huge, but laying the groundwork for IT standardization is no easy task.
Computerworld - Every Monday morning, executives at Procter & Gamble's Cincinnati headquarters file into an elliptically shaped conference room known as the Business Sphere, where giant video screens wrap around curved walls that display detailed, interactive visual reports on the consumer products maker's operations.
Business unit executives in similar rooms worldwide, assisted by business intelligence specialists from P&G's Global Business Services group, participate by videoconference as the groups collectively review the numbers for some 300 beauty and household cleaning brands sold in 180 countries. There's no arguing over whose numbers are right -- every business unit follows the same business processes and uses the same applications and analytic models. Executives are expected to come to the meeting prepared to drill down into these numbers, explain trends, identify underlying factors and come up with an action plan.
"[It's] analytics to the extreme," says CIO and group president of Global Business Services Filippo Passerini.
As the growth in global business activity continues to increase, P&G and other businesses are re-engineering IT operations around centralized IT infrastructures. By consolidating and standardizing business processes and applications, these businesses expect to achieve IT cost savings, economies of scale -- and a competitive advantage. Having a set of interlocking, consistent IT business services worldwide can add value and deliver consistency to the business.
But selling the idea can mean stepping through a few political minefields, and it won't work everywhere. The benefits of consistency must be balanced against the need for localized applications and business processes.
"No matter where you are in the cycle, you should be targeting global business services," says Bobby Cameron, an analyst at Forrester Research. "The agility, flexibility and knowledge of the customer can't be done with disparate data and systems around your core."
But getting to that point is an evolutionary process, IT executives say. Many organizations are still struggling to get through basic IT infrastructure consolidation and standardization efforts, and the political waters get deeper when such projects move beyond the core enterprise applications, such as financials and HR, and into front-office applications such as sales and marketing.
"There's always a tension between what should be done locally and what should be done globally," says Dave Kamath, vice president and CIO at IDEX, a manufacturer of pumps, dispensing equipment and other engineered industrial products, which has been consolidating both front- and back-office applications in 27 countries worldwide.
P&G's system, for example, is the culmination of a decade-long global shared IT services effort that started with the centralization and consolidation of core IT infrastructure and ERP systems, and the optimization and standardization of associated business processes worldwide.
Most businesses measure the initial payoff of IT globalization initiatives in IT cost savings and infrastructure-level operational efficiencies. By that metric, Passerini says, P&G cut its IT costs by one-third and saved $1 billion over the past nine years. But the global business services built on top of those common platforms and processes are becoming a vital competitive differentiator as well as a potential revenue-generator.
At P&G, the goal is to innovate faster in order to compete in a market where the speed to market for new products is accelerating. Those business services, ranging from strategic sourcing to product innovation, "have dramatically compressed our time to market," Passerini says.
Similar efforts are under way at The Vanguard Group, Bank of America and Equifax. Here's what IT executives at those companies have to say about building -- and selling -- a global IT services operation.
Centralize, optimize, innovate
IDEX, which is headquartered in Lake Forest, Ill., and does business in 80 countries, started by consolidating its global IT infrastructure and core ERP applications into a private cloud. But the real value came from building within that cloud common sets of shared application services called platforms, which business units that sell into the same markets can use collaboratively to provide more comprehensive offerings to their joint customers. For example, several lines of business sell components that go into subassemblies used by manufacturers of healthcare diagnostics equipment. "Now we're talking about a system rather than individual component sales," says Kamath.
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