Globalized IT operations pay off
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.
July 16, 2012 06:00 AM ET
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 displaying detailed, interactive 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 those numbers, explain trends, identify underlying factors and devise 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 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."
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 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.
Five steps to IT globalization
Consolidate onto a private cloud infrastructure.
Globalize core enterprise network services and applications.
Standardize business processes.
Establish common front-office systems and other software platforms to enable integration of business units that sell into the same markets and to create collective synergies that will help increase revenue.
Transition in stages from a federated structure to a multicultural, virtual IT organization that's centrally managed but dispersed globally so as to be close to each business unit.
Optimize business processes.
Move toward strategic sourcing.
— Robert L. Mitchell