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.

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P&G's Fortner offers this advice: It's OK to have big goals, but start with a small project. Begin by forming a shared services business unit that reports directly to the CIO. Conduct an inventory of business processes that cut across the enterprise and identify the ones that offer the most value to the company by standardizing. Then begin with a defined project in an application area such as HR or financial services. "Do a smaller core set first, prove it and go from there," says Fortner.

A good place to start is with accounting systems, says Forrester's Cameron. "Politically, that's easier to get done," he says.

Going Beyond the Core

Moving standardization efforts beyond core applications is where things can get sticky. IT must strike a balance between what should be consistent across the company and what needs to be differentiated -- a process that Bessant calls "paint-by-numbers vs. Picasso."

"We try not to create a Picasso every time we undertake development, but not every project fits the paint-by-numbers approach," she says. In the end, differentiated applications are allowed only where absolutely necessary to the business. And all applications must follow standards -- for example, they all must have the ability to support multiple currencies from day one, instead of building for the U.S. dollar first and adding support for other currencies later.

At P&G, the battle was just beginning after core applications had been centralized and consolidated, says Passerini. With 99% of core applications on the global SAP system, the CIO turned his attention to all of the other applications used in the business and was surprised to find that only 27% were standardized. In just one area -- the management of promotional funds for retail customers -- P&G had 55 different systems in place. Over the past four years, P&G has gradually increased its overall standardization rate to 80%, and Passerini says he expects that figure to eventually hit 100%.

Other businesses may find that some applications must remain local, says Cameron. Sourcing, manufacturing and distribution planning often go global, while the sales, marketing and final distribution functions frequently remain local. "That local-global balance is the magic," he says, but it's often more of a political problem that needs to be solved, rather than a technical one.

The final step at IDEX, Kamath says, has been to build a global virtual organization -- a multicultural team that's distributed geographically in order to stay close to the customer, but that reports back to the central shared services organization. The virtual team has staff members in a range of locations, including Europe, China, India and Canada. "They need to be dispersed geographically, to be able to work independently and to be able to work with individuals from different cultures," Kamath says.

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