Think local, act global (page 1 of 4)

Instead of achieving the economy of scale of a global enterprise, many multinational corporations still function as a loose confederation of U.S. and foreign business interests, each with its own reporting systems, business practices and IT solutions. In a time when corporate accountability is under intense scrutiny, corporate financial officers must certify the performance of diversified holdings around the world without standardized processes or integrated information systems. Moreover, with scores of data silos around the world, companies operate with huge information blind spots. It can take weeks, even months, to collect, reconcile, translate and analyze a company's regional and overall performance. As one CFO ruefully put it, "What I get every fiscal quarter is a global headache."

The situation is an outgrowth of outdated technology and business practices. For decades, the prevailing wisdom for companies expanding oversea was to: "Think Global/Act Local." This market theory was based on acculturation: the practice of customizing product and services for regional consumption in accordance with the local language(s), currency, culture and regulatory climate. Not surprisingly, localization encouraged each country of operation to develop its own customized IT solution and operational procedures.

There is a difference between operating around the globe, and being global. Globalization refers to the process of streamlining and standardizing communications, business functions and management practices throughout the global organization. While the global offices remain sensitive to cultural and compliance issues in the markets they serve, the organization functions as an integrated, global enterprise. This model, reflecting the new economic realities of a 24/7 global marketplace, can be summarized as: "Think Local, Act Global."

Globalization touches all businesses today, regardless of size or location. A small company or specialty manufacturer might not serve an international audience, but the organization can improve its supply-side economics by finding alternate sources of product and services in other markets. For large corporations, the benefits are far-reaching - literally spanning the globe.

In this article, we will examine the road to globalization and what changes must occur across-the-board to support the new organization. I will spotlight important considerations in designing and implementing a globalization strategy, drawing on customer experiences. We will focus on the enabling technology and what specific technology features and functionality support and abet the process.

Change the culture
Among companies around the world, there is near unanimous agreement that globalization is a strategic priority, however, uncertainty exists over how to enact such comprehensive change. Corporate decision-makers tend to see globalization primarily as a technology challenge, but from our experience, the largest impediment to globalization is cultural.

The "Think Global, Act Local" mindset is firmly rooted in corporate culture. Within most large, geographically dispersed organizations, the overseas offices and subsidiaries continue to operate with a great deal of autonomy. Seeped in the local business customs and laws, the in-country managers are regarded as regional experts and their decisions regarding that market are largely deferred to. They typically have proprietary IT systems to handle various aspects of their business, and purchase goods and services from local vendors and suppliers.