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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

No Longer Shelling Out for a CIO

It is far more than that at oil giant Shell. Yet the firm no longer has a CIO in Australia. "We don't have anyone any more," a company spokesperson says. "We operate a lockdown system out of the Netherlands. There is no decision making done here."

The spokesperson adds that there was a local IT manager who reported to the firm's Houston (US) office. She says Shell broadly operates with global reporting lines and strategies that are implemented locally by local managers based on its overall global business strategy, which is "more upstream, profitable downstream". Having the fundamental platform delivered globally frees up local managers to tap into new and different ideas, which could then be replicated internationally.

However, Shell was not willing to have its IT manager discuss what those were. This is another area of control for many subsidiary CIOs who feel bound by international corporate policy regarding public disclosure. Sometimes that lingers even after they have left.

An international financial institution with operations in more than 100 countries has tightly controlled public affairs policies, which led to the CIO only agreeing to discuss the topic if he or she and the institution were not identified. Despite the controls on public commentary, the CIO says that in the institution, global IT had only begun to scratch at the surface in terms of liberating the real value in having an international IT community. "We are pretty fragmented and run as a sort of loose federation. The headquarters IT group does set some standards on structure and has negotiated some good global procurement deals, which allows me to focus on local commercial issues.

"Where that comes a slight cropper is where the people in HQ don't always take a commercial view of things. For instance with security, they would not necessarily look at the commercial pressure. Recently they said that there was to be no e-mailing business-related information unless it was encrypted. It would have cost us millions and restricted the business.

"Now we were not just going to ignore it, so we explained why it wouldn't work," and the constraint was lifted, says the CIO. While the CIO acknowledges that there are benefits from having some issues tackled at international level, there are concerns that people in headquarters IT are too far removed and detached from the business to always make the best commercially focused decisions.

However, the CIO says that in the past year, "the tone of that group has changed from being the corporate police to being a group that adds value". The CIO says that there is now a recognition that value will come from sharing more applications and know-how and developing a technology blueprint to steer the business by, and allow virtual teams of IT workers to be established wherever they are based. "That could realize some significant value," and also ensure that the IT people nearest the business take more key decisions.

"The collaboration could change from a hub-and-spoke arrangement to more of a peer-to-peer arrangement but still controlled by headquarters. That model would get us closer to a common reality and deliver better output." Although the company has started down the track, the CIO believes it would take some time to achieve the sort of global technology blueprint that underpins global giants such as Accenture and Citigroup. For some there never will be that level of global control and conformity, and that is particularly the case in global franchises.

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