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4/11/2005
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A Local Focus Is Crucial For Global Companies

Companies trying to implement standard business processes and technology worldwide need to be sensitive to local issues.

The phrase "Think Globally, Act Locally" has been around so long that at times it seems little more than a bumper sticker slogan. But that doesn't make it an easy goal for companies doing business in a hundred or more countries trying to ensure that technology infrastructure and business processes operate on a consistent basis worldwide. That was the message from panelists speaking on "Managing Borderless Growth" at the InformationWeek Spring Conference on Monday.

Diageo Inc., a major supplier of alcoholic beverages, operates around the world, having grown through a series of mergers and acquisitions, and is working to standardize IT systems worldwide, including an ERP system from SAP that Diageo spent $100 million to deploy in North America alone. While the company places a high priority on standardizing processes and technology, Barbara Carlini, senior VP and North American CIO, says the company has to be sensitive to local regulations and cultural issues involving alcoholic beverages. "Finding the right balance between global and local can be difficult," she said.

In some Middle Eastern countries, it's illegal to visit a Web site tied to an alcoholic beverage. In other countries, such as many in Europe, attitudes toward alcohol are liberal. To deal with those differences, Diageo has implemented what Carlini called "a nanny tag" on its Web site that requires visitors to indicate where they are located and their age. "One person making a mistake that could be viewed as marketing to children can cause us a lot of problems," she said.

Honeywell Inc., which gets about half of its $27.5 billion in annual revenue from outside the U.S., also is trying to standardize its technology infrastructure and business processes within each of its four major business units worldwide. One of the biggest challenges is finding the right people to move that process forward. "There is a process owner in each group. Where that person is strong, we get good results. Where that person is weak, we get weak results," said John Jalovec, CIO and VP of global applications. He said Honeywell has had to slow down its business-process transformation efforts in some regions for the company to get the right people in place to guide the effort.

The Chicago Mercantile Exchange, which traded $355 trillion in futures contracts last year and is expecting growth of around 250% this year, also has to be aware of local conditions in other countries because those who use its electronic trading and clearing platforms can be located anywhere in the world. To ensure a level playing field for traders worldwide, the exchange must ensure that trades are completed quickly wherever they're placed, said Charlie Troxel, managing director and CTO. Technology improvements have cut the response time from three seconds in 1992 to 30 milliseconds today.

The Exchange has been working with officials from China to help that country set up its own trading system. Some foreign countries have an advantage when it comes to technology, because they're starting from scratch. "They don't have a lot of baggage to unlearn," he said. "It gives them a leg up and they can reach a broader audience right away."

Glen Meakem, the managing director of venture capital firm Meakem Ventures, created a business-to-business exchange called FreeMarkets, which he later sold. He now invests in technology companies, including those in India. He said global businesses need to understand that countries like China and India may become new sources of innovation. "They may create new products or standards that the rest of the world has to follow," he said. "Innovation is cultural more than anything else."

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