There is an old Irish joke about a hapless Englishman
asking a local for directions on the Emerald Isle. In the end, the
Irishman says, "Y'know, if I were going to Balbriggan I would not
start from here at all."
When trying to create coherent technology standards across the
globe to lower costs, your average CIO finds himself in a similar
position, says Andy Kyte, research fellow at analyst firm Gartner.
"Anybody can design the perfect end state of IT to support the
business. If you draw it and show it to the board, they would say,
'yes, we will have that'.
"Nearly always you are faced with the more difficult challenge
of managing the transition from a heterogeneous legacy
environment.
"They will have multiple datacentres, enterprise resource
planning, disparate business processes, markets and cultures. The
general response of anybody looking at the requirement to globalise
is, 'I would not start from here'."
Yet it is a challenge many global businesses see as essential to
overcome as they strive to grow without facing a massive increase
in support costs.
Unilever's globalisation
path
Few companies exemplify the trend towards globalisation more
than Unilever. Last year the consumer goods multinational - with an
annual turnover of £27bn - extended a deal with
BT to manage its global network infrastructure in an effort to
lower costs.
In the contract, worth nearly £100m annually, BT took over the
operation of Unilever's fixed and mobile voice, data and video
services for about 1,000 sites in 104 countries. In total, 119
Unilever staff were transferred to BT.
Unilever sought to save 20% on network spending, which BT aimed
to achieve largely by standardising and rationalising the huge
variety of technologies it was using around the globe.
Tom McLoughlin, client managing director for BT on the Unilever
contract, says the approach was integral to Unilever's business
philosophy. "Globalisation for them is critical. Over the past five
years they have been implementing a strategy called 'path to
growth', and that has defined what they wanted to develop."
Before this strategy was implemented, Unilever's approach to IT
was federated, McLoughlin says, meaning that each country's
division owned its own IT. "There was no standardisation. It was a
mess and the cost was colossal," he says.
Getting the management right
But it was not only a technical challenge that faced the IT
organisation it had to get its management right too.
By bringing in Neil Cameron as CIO in 2003, the multinational
appointed someone who understood the language of technology and the
language of business, McLoughlin says.
"Out of the IT people I have met, he is the one who sits most
easily on a PLC board."
During 2005, the IT organisation kicked off its "One Unilever"
programme, with the aim of saving £490m a year. This required a
process of technology standardisation, which drove a strategy for
outsourcing and IT partnerships that included Microsoft, HP and
SAP, as well as BT.
Oracle and IBM make up the second tier of the partnership.
The main weapons in BT's assault on Unilever's IT costs were the
deployment of a global wide area network and consolidating the
number of mobile suppliers the firm worked with.
However, BT's approach to standardisation was pragmatic rather
than ruthless. "There is no point in changing local suppliers if
they were doing a good job, and you have to take into account the
local economic conditions," McLoughlin says.
"You cannot put in a state-of-the-art Cisco network end-to-end
when the whole country is still run on mail and courier services.
You have to be sensible."
BT did inherit considerable legacy technology, and it has taken
over the management of about 1,000 old-style PBX telephone
exchanges. Although in some cases it is desirable to move to
voice over IP systems, at
other times it is better to leave legacy technology in place and
"sweat the assets," says McLoughlin.
These technology decisions can also be influenced by local
regulation. "In China, for example, you can only buy from one of
two suppliers, and they have non-competitive agreements, so our
hands are tied over who to go with."
The benefits of globalisation
Despite the challenges, the rewards are there.
The Corporate IT Forum (Tif) is
a group where FTSE 100 CIOs and IT directors share their knowledge
of managing global IT infrastructures. Ollie Ross, head of research
at Tif, says, "We have examples where businesses have seen reduced
costs and improved control of costs."
Achieving these benefits is a question of balancing them against
the pain of reaching your goals, she says. "One of the drivers for
doing that is cost containment and easier change management. While
I see some organisations attempting to standardise aspects of their
technology, sometimes the cost of achieving those standards can be
too much."
According to Kyte, it is again management skill, not technical
knowledge, that will determine how successful global technology
projects are. Whether rolling out a global application or
standardising a desktop infrastructure, how the CIO works with
local management is key.
"It is essential for the CIO to engage with business users in
order to get their buy-in for what is going to be a painful process
of transition," he says. "You cannot have a global IT and leave the
business unchanged. If you are effectively giving them the pill to
globalise their business, then there are going to be some negative
side effects."
Ross and Kyte agree that the best way to start is to find out
where you are to understand what the existing infrastructure is, in
detail, in every country you operate in.
"There needs to be a detailed understanding of the asset
portfolio of IT and business processes where there are roots in the
ground," Kyte says.
"You need to know about skills profiles, technology, languages,
apps and data sets. Without that, anyone trying to design the
future is setting themselves up to be sniped at by individuals who
have less autonomy as a result. They would say, 'you did not take X
and Y into account'."
IT organisations attempting to achieve technical standards also
need to build the right local teams. "There needs to be a
development of communities within IT capable of taking on the
transition to a future state. You cannot just do this to people,"
Kyte says.
The drive to standardise can change the culture of governance of
IT, Kyte says. "The investment management process is: define the
business case, then get funding. New apps, upgraded apps. That is a
well-established process, and a lot of people think it is the core
of governance.
"The problem is these siloed decisions need a fundamental
challenge. They need to move away from a silo decision to a more
integrated portfolio approach to investment. Individual investments
are not justified in their own right."
Ultimately, IT can only create global technology standards if
the business is organised in that way. Where a company such as
Unilever has taken a decision to manage its bands and operations at
that level, then technology standards can offer benefits. If an
organisation is more federated, like when private-equity firms buy
a group of companies, IT can still take advantage on a global
scale, but with a different approach.
"What you can begin to do is develop a portfolio of services and
relationships rather than tell people what to do," Kyte says.
If an IT organisation working in this way can find three or four
applications common to a number of businesses, then it can begin to
offer them as a service and gather support for this model of
working, and improve control of cost as a result, Kyte says.
Whatever the shape of the organisation, success in reaping the
benefits of global standardisation - whether in networks,
application, desktops or servers - can depend on your relationship
with these suppliers. This is the aspect of global IT management
that Computer Weekly will examine in the next instalment of this
series.
Key challenges in managing a global it
infrastructure
● Most CIOs find it quite difficult to work with global
suppliers because very few actually exist. A lot of key suppliers
do not work in the same way throughout the world. Sometimes they
are direct, and sometimes they work through resellers. Even though
there may be central account management, that can be taken
advantage of locally by either side.
● Budgets are hard to manage on a global scale because of the
varying relative cost and value of software and hardware around the
world. We all know a PC can be differently priced in the UK and US,
but it is not only the surface cost that may be vary. The cost of
running a business unit also differs. If you standardise PCs and
monitors on everybody's desk, the cost may become prohibitive in
certain parts of the world.
● There are restrictions on importing technologies into some
countries. This means the desired build of PCs or servers may not
be available across the whole organisation. Deviations from
standards must therefore be tolerated.
Case study: how hsbc manages global datacentre
estate
HSBC is a good example of a global organisation with strong
central control. In this series we have already reported how the
financial organisation has created offshore IT support and customer
service and has adopted a centralised development model. This
allows the firm to build new e-commerce software rapidly, but
deploy it with a local look and feel.
Now the firm has invested in technology to help it manage its
global estate of datacentres.
The bank has employed Aperture Technologies, which makes
software for managing the physical infrastructure of datacentres,
to improve capacity planning and management in its datacentre
operations worldwide.
The software helps visually manage the complex physical
environment of the datacentre. HSBC can now see all datacentre
infrastructure variables at a glance, including space, power,
cooling, network and storage to keep the datacentre at peak
efficiency.
HSBC has 22 datacentres in 10 countries, supporting 312,000
staff and 125 million customers. Implementation of Vista 500 will
begin this year and is expected to be complete worldwide by
2009.
Edward Case, a senior business consultant with global datacentre
services at HSBC, says, "Having accurate, consistent and readily
available knowledge of your datacentre inventory and what you have
running where, together with your power, cooling and space capacity
is not easy to achieve.
"Aperture will provide a central repository, so we can see this
information both on a datacentre basis and globally. It will also
bring consistency to our processes for managing datacentres."