When CIOs think about enabling global expansion of their enterprise, the G-word comes quickly to mind: governance.
A big CIO fear is that IT decision-making, oversight, even simple visibility, will quickly become a muddled mess without a foresighted and careful global governance structure. When CIO Executive Council members collaborated to create a Globalization Playbook last year, governance was a significant section.
The fundamental consideration in global governance is the control model. That is, does IT authority reside centrally, locally, or is it a combination of the two? There is no perfect governance model for global IT; tradeoffs are inherent. One model that works at a certain stage in a company's lifecycle may be ill-fitting at another stage. However, most of the CIOs interviewed for the Council's playbook use a central control model, placing all of their IT governance authority at world headquarters. That means the corporate CIO and senior leadership team are responsible for decisions such as IT strategy, project prioritization, system selection, application development methodologies and so on. Companies in cost-cutting mode will often gravitate to centralization, seeking to minimize duplication of effort at the expense of local customization.
When significant local control is permitted, the model becomes a hybrid, where enterprise standards and global systems are controlled by the central IT authority, but local IT management is responsible for selecting and managing some systems, such as customer relationship management.
A distributed model puts nearly all authority for what projects IT tackles and what systems are adopted at the local level, perhaps with some financial support systems or e-mail provided by world headquarters IT. Local, decentralized control was the least used governance model among the Council sources, though often it is the de facto model as companies grow organically in diverse regions or through acquisition.
Choice Considerations
One simple way of thinking about the model choice is "centralize for efficiency; decentralize for effectiveness," says Michael Pilkington, former CIO of Brussels-based Euroclear. When considering a global IT governance model, it's key to understand the operating model of the business you must support and enable. Is the operating model globally, regionally or country-oriented? Does the company care about alignment across regions? At Motorola, for example, alignment is critical, says Cathie Kozik, corporate vice president of supply chain IT. "Leveraging solutions across the global organization and not recreating the wheel is important to us." Motorola has gravitated toward centralized IT governance.
Focusing on IT processes can also point to the best governance model. Weigh IT processes in terms of which are truly core to your business - project management, process specialization, infrastructure support, application development and support. Could your core processes or standards be controlled centrally? Could they be executed according to local needs? Could your non-core processes be locally managed?
For Claudio Abreu, CIO of corporate and business services for Bayer North America, strategy and core processes must always be the same globally. However, the strategy should always be executed in a way that makes sense for the location, a trademark of the hybrid governance model. "We don't believe in 'remote control' on day-to-day operations," says Abreu.
Decision-making culture must also be a factor. How virtual is your business's existing culture? Where does the business's thought leadership and direction come from? Is it all from one place? Is it through a council made up of leaders from a variety of units? How does the business get its collective wisdom? Local IT autonomy may fit naturally well into a culture where decisions already arise from input that comes from beyond the walls of headquarters.
Another consideration is location. Where will you be locating staff? Consider the local and regional HR laws of these locations, for they will impose some parameters on, or exceptions to, your governance model. Also, are there unique strengths in a particular culture or country you could leverage? Region-specific centres of IT excellence could be a useful approach to build into any governance model.
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