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IT is a global industry

by Mark P. McDonald  |  September 29, 2009  |  2 Comments

I would place IT among the more global industries in our economy and that has implications on how we think of IT strategically, operationally and technically.  IT was going global in the late 1990’s before many companies were global.

One might think that IT is global because of developments such as offshore outsourcing of IT processes and activities.  IT is global for more reasons than geographic diversity.  Cheap global telecommunications, Internet connectivity, the existence of dominate global software and hardware solutions are all indicators of a global business.  This coupled with the predominance of English as the language of IT extend the IT’s reach into a trans-national industry.

IT will be next to impossible for IT to go back to a national or regional basis as now companies are evolving to become more globally oriented and operated.  However IT is not completely global – CIOs often comment that gaining global agreements with supposed global technology companies is more fiction than fact.  While tech companies may say they are global – CIO experience indicates that these companies operate more as multi-national divisions in terms of their operations, pricing and outlook.

Developments like ‘cloud’ computing, global data center operations, offshore business process outsourcing all point to continues expansion of IT’s reach beyond geography.  In fact the elimination of geographic consideration is hailed as one of the benefits of the ‘cloud.’

IT will continue to move from a national to multi-national to global to globally virtual industry.  Here are a few thoughts and observations on what CIOs and IT executives are doing to manage in this way.

Put the work in the right place, not just with the cheapest people

Global CIOs make decisions about where to locate the work.  Surprisingly the best place is not always in the lowest cost country.  In fact, recognizing the limits of international labor arbitrage seems to be one of the indicators of CIOs adopting a global rather than multi-location mindset.

Leading CIOs place the right types of work in the right location.  They match the right combination of high science, resource availability/capability, resource costs and the business value of the operation.  This justifies some IT jobs close to the customer or business operations – regardless of the labor rate.  It justifies have other IT jobs in locations that have a community of specialized skills (for example, medical technology skills in U.S. Northeast, Quantitative analysis skills in Paris, etc) In these decisions the value of the work and the availability of resource determines the ‘best’ location.

Use IT operations as a demonstrated investment in your customer’s country

CIOs recognize that a global outlook extends into the realm of market development.  They know that an investment in a data center or development site represents their company making a tangible commitment to a local economy and market.  Such a decision not only builds capability in the right place but also creates a sense of mutual exchange in that economy – I buy from you because you invest in me.

CIOs with this broader perspective consider doing business in countries that do business with us, before making a global decision.  CEO’s recognize that market savvy and in one case the CIO recognized for his business savvy decision to locate operations where the company was looking to grow market share.

Get more than sunshine from globally distributed operations.

“Follow the sun” development is hailed as a benefit of offshore locations.  Global operations constantly in motion are another benefit of being multi-national.  Global CIOs recognize more than the value of a continuous clock.  They seek the enlightenment of concentrating a diverse set of people on a common problem.

Getting diversity from global resources is the toughest challenge according to Global CIOs.  The challenge does not come from the people, or their ability to bring their talents to a project or issue.  No, the challenge rests in finding project managers who can bring a team of diverse and disbursed people together to create a common solution.  In some IT shops these multicultural project managers are the best paid and most sought after resource because they are essential to getting results.

The evolution of IT continues moving from the physical to the virtual

Not every IT organization is global or will need to be global.  However, many are global whether they know it or not based on their service providers operations.  Every IT organization will face the need to move into a virtual world where physical location matters less and less.  This is the characteristic of Cloud computing and software as a service – this is a future management challenge that will require CIOs to get the best results from tapping into the best talent and resources.

Additional Resources

Category: cio  strategy  

Tags: global-it  it-organization  

Mark McDonald, Ph.D., is a Vice President and Fellow Emeritus in Gartner for General Managers Program.




Thoughts on IT is a global industry


  1. Andrew Meyer says:

    Mark,

    as always, a great piece to inspire thought. Could I add one other observation and some interpretation?

    Wine is a global business. We could sit down to a lovely dinner in Boston and practice our geography selecting the perfect wine grown in a specific region. It’s core element, the flavor of the grape, is dependent on precise soil and weather conditions that are uniquely local.

    IT is global because it’s core elements are precisely the same everywhere. Code compiled in India is exactly the same as code compiled in California. Likewise, a CPU cycle is the same in Berlin as in Boston.

    To me, the reason CIO understanding needs a local flavor, even in global companies, is that business environments are driven by local concerns, so the business infrastructure and processes need to serve the local environment. So while an ERP system’s capability maybe exactly the same everywhere, its implementation is locally driven.

    The ability to understand articulate local needs takes time. Add to that the difficulty in understanding system capabilities and correctly implementing them to meet both local and global requirements and you have a difficult task. Finally, one cannot forget the political environments existing both locally and globally. Understanding and navigating these challenges presents one with a difficult task.

    At times, the pendulum swings to the global power base, while at other times it swings to the local. Maybe difficult global environmental conditions and lower cost, local alternatives, seem to be strengthening the local hand. Plus, in my experience, I can see the effects of local initiatives much more profoundly then I ever could global initiatives.

    Finally, I’ve never enjoyed a global grape, but I’ve cherished the vintage from some from Bordeaux, whether I’m in Boston or Bangalore.

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