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

Sidebar: IT Under the Yum-Yum Tree

Master of His Fate

Yum Restaurants International, based in Dallas, Texas, runs brands such as KFC, Pizza Hut, Taco Bell and Long John Silver's. Patrick Teh is the CIO of Yum Australia and has a direct line of report to the company's chief executive in the South Pacific and a dotted line report to the vice-president of IT in Dallas. It is an arrangement that provides Teh with considerable — if not complete autonomy — and that, he believes, works best. "Certain standards have been predefined by corporate office, mainly infrastructure such as networks or wireless standards. They have a team of people who do all the research and then prescribe to you. I don't have a problem with that. It means you can have a truly global enterprise; you can package up a PC anywhere and, bang, you're up and running beyond the infrastructure."

The key to allowing this plug-and-run strategy is having a robust global financials and ERP system. "A general ledger system is a general ledger system but you can gain synergies if you're purchasing and negotiating, and also if most processing is carried out centrally," Teh says.

That is the theory anyway. Although most of Yum's international operations do share information infrastructure and use Oracle's Oneworld, an accident of history has left the Australian operations running on JD Edwards. Teh says that at present it simply does not make sense to spend the $1 million or so to bring Australia into line with the global operations, although he acknowledges that from a Sarbanes-Oxley compliance point of view, running different information systems around the world does create some challenges in terms of providing a single view of the company financials at any point in time.

"When Oracle releases the Fusion product it may make sense for us to change," Teh says.

The fact that head office has not laid down the law and required Australia to migrate is important, according to Teh. "From our business view in the casual dining industry it makes sense for corporate to provide guidance regarding the point of sales or back of house systems. Where problems can arise is where they are too prescriptive, because not every market is the same." As Teh points out, not every product is supported in every country and access to local skills may also prove a hurdle for overly prescriptive multinationals.

That's where Yum's loosely coupled model works best. Teh says corporate IT has tried to work with the markets over the years — generally by creating a framework and guidance with regard to system selection. Mature markets may be granted more flexibility if they have the IT skills to support alternative technologies, while emerging markets may be more closely controlled.

"In a mature market they [Dallas IT] tend to relax; they know we will make it work." Teh says the more mature markets are left alone, "as long as we don't play Russian roulette and opt for a solution that is not built on contemporary architecture or is run by a one-man band. That's good governance in my view".

However, Teh does not have carte blanche. "I do have to do quite a bit of articulation if I waiver from their choices."

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