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."