Tuesday, October 5, 2010

Are You Global or International?

Is your organization global or international? Do you know the difference? Does it matter in terms of how you plan for and carry out technology operations such as support, procurement, hosting or messaging? You should know and yes, it makes a huge difference to the structure of your technology operations. Trying to operate a global technology strategy at a company who is truly an international entity will surely pit business needs against your technology goals, setting the stage for failure. So are you global or international? I am sure there are volumes of business school literature on this topic but here is a simplified distinction that is immediately relevant to your technology planning efforts.

Global companies will produce standard products or services that are not tailored to the specific tastes or needs of specific country markets. Usually, such products or services will not be differentiated by brand recognition and may represent either commodities that serve as inputs to other products or services or as standard outputs that don’t vary across markets. An example could be an organization who produces chemicals that go into other industrial products to produce a final result. While certain aspects such as specific packaging or regulatory considerations may vary from market to market, there is more commonality across markets than differences. This has a huge impact on how you are able to design and structure your technology systems and associated services. There will likely be a single set of business systems that have been slightly customized to fit the needs of specific markets. A centralized infrastructure and associated support model may function well in a global organization. Such centralized services could potentially go beyond commoditized IT services such as email hosting to include more advanced services such as centralized Service Desks. Can all technology services be centralized in a global organization? Of course not, local market needs will always dictate some degree of local flexibility. In a global organization however, the technology synergies across operations in different regions around the world will outweigh the need for local differentiation.

International companies may operate in markets around the globe, but tend to offer distinct products or services in each market that are customized to local tastes or market requirements. Products or services such as consumer goods that rely heavily on brand recognition tend to be heavily tailored to local tastes, customs and trends. For example, a packaged meat company operating in Asia, Europe, Latin America and the US will likely have highly differentiated SKU’s for each specific market. In addition to product differentiation, consumer goods often have very distinct and varying methods of distribution across global markets. For example, in the US, consumer goods may be delivered to central warehouses of large big box retailers who then ship products through their own logistics chains to grocery shelves. In some Asia markets, the dominance of the small, local shops may dictate a Direct Store Delivery (DSD) model where product is delivered straight from the manufacturer to the store shelf. In International organizations, the need for local market flexibility will dictate a need for market specific technology services. This does not mean there are no technology synergies to be had at international organizations. Again, commodity services such as email hosting or centralized infrastructure support along with leveraging buying power through centralized procurement may represent true opportunities for working globally while acting locally.

I have obviously painted this topic with a wide brush but hopefully the point is clear. Understand the needs of your organization in terms of its operations around the world. Don’t try to centralize services where local flexibility is needed in order to win in the local market. Don’t leave services local that represent cost saving or opportunities for scale when managed centrally. Understand that there are times when being global and being international are not the same and that a misaligned technology strategy can hamper your organizations success in either case.


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