The Subsidiary Sandwich

The Subsidiary Sandwich

CIOs in subsidiary offices of global corporations often report to both the local CEO and the international CIO. Serving two masters can be liberating or a liability. A look at the chance and challenge of running a subsidiary’s IT

"The door was more open to the CIO of Unilever than the CIO of Joe Bloggs and Company, which would have been the same size in Australia."

She also had on occasion access to specific technical skills in Unilever's network and having Singapore providing the ERP grunt freed her to spend more time on how to help the business to grow. "But there was very much a flip side. For example, I was running Compaq machines and the rest of the region was purely an IBM shop. I needed monitoring tools and at that stage Tivoli did not support Compaq.

"If I'd followed the global policy I would have had to buy a product which had no local support and no localized office and would cost $200,000, which was a large chunk of my IT budget. I had to go through hoops to buy a different tool — which I eventually did for $20,000."

Bartlett says she felt sometimes that head office did not understand the difference between the environment in Australia and that in the UK. "Having worked in the UK I know that they do look at this and pay lip service to it by getting vendors to tick the box to say yes they have an Australian presence. But then you find out they've only got someone who sends out brochures. I'm exaggerating — but that's what it was like."

A further downside was the sometimes glacial pace at which decisions were reached. "Because every decision affects every country around the world it can take a long time. We all know that we have to react quickly — and more quickly than is made easy by being part of a global company," Bartlett says. The due diligence that had to go into every IT decision inevitably slowed the process down, which sometimes led to Bartlett having to make local decisions ahead of global policy. For example, the company locally had identified a need for a business information system and decided to install a Cognos solution ahead of the rest of Unilever. Sometime later, Unilever announced it was standardizing internationally on Business Objects.

"What do you do? Well, you have to migrate across and then slow everything down. That was a local decision we had to make in the absence of a global policy or wait for a decision."

Putting You In Control

Like Bartlett, Charlie Macdonald, the IT manager of DHL Oceania, has experienced both light and shade as a subsidiary CIO. Macdonald has been in Australia for 18 months after a six-year stint working for the freight giant's IT operations in Malaysia. "What is refreshing about a large organization is that you don't have to worry about what product to go and buy," Macdonald says. "If we need to update our financials we don't have to waste time researching the market. We implement the global standard and pay the global rate", already identified and negotiated by the global firm for its operations in 220 countries.

"Our decision making is streamlined and that saves time. The strengths of this are that we do have a number of standards and best practice in our organization. We don't have to reinvent the network."

Underpinning the information services used by DHL are the three large IT shared service centres in the Czech Republic, Arizona and Malaysia, which provide many core applications, including e-mail. Macdonald has a direct reporting line to the senior vice president of Oceania and dotted line reporting to the regional CIO in Singapore, who in turn reports to the US-based global CIO.

The IT infrastructure is largely provided by one of the three global IT centres, with semi commercial arrangements and service level agreements between them and the subsidiaries. While responsibility for the provision of those services lies with whichever of the global centres provides the services, the accountability regarding those services rests with Macdonald. This he believes is important because general managers need a senior manager on their local team who owns every aspect of the delivery of the IT service.

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