The world is a different place now, creating a business environment driven by real time operations and an increased sensitivity to activities in the global marketplace. Companies are reaching beyond their former geographic limitations to explore new challenges and opportunities.
“It’s as likely as not that someone will want to do business or have a transaction occurring with a European counterpart,” said Bill Trafford, group executive, global delivery services, MCI Systemhouse.
The big change, according to Trafford, is the development of common applications and the incredible demand for services to be added to the network.”An important example is e-mail,” he said. “Five years ago, it was quite the thing to have e-mail within your own company. Now I don’t think I have a single customer that does talk to me by e-mail.”.
Pressure on the Network
As electronic communication replaces more and more of the communications formerly achieved telephonically and face-to-face, so does the pressure to have ubiquitous access to the network and cross access between companies. The need for the ability to provide that access, said Trafford, is going up ‘an exponential curve.’
“The flip side of that is the intensity with which people use it,” he said. “I don’t know of very many who don’t rely on e-mail and on-line systems providing information.”
This new dependence on electronic communication puts tremendous pressure on information technology (IT) infrastructures of companies operating internationally. As different systems are added, the interconnections become more complex and the demand for services goes up, that pressure increases dramatically, according to Trafford.
Part of that pressure is the need for flexibility. “With a real time environment, where both internal and other organizations are contributing to how a product or service is created, we need to have applications that allow systems to interact with other company systems,” he said. “We can’t just put it in a box anymore and say here it is.”
First Comes the Global Network
Because of the role it plays, Trafford said the global data network should be built before a company moves into another country.†
“I do work with a lot of companies with international capability, and what I find on an almost continual basis is that they cannot have joint operations in a foreign country without having their IT infrastructure in place in that location,” said Trafford. “It is vitally important that you design your network and systems so that they do have global reach, even though you might not think you’re going to need it.”
Another driving force behind the demand for network services is the way companies are doing business today, according to Trafford.
“Major manufacturers, in almost all cases now, are essentially becoming assemblers,” he said. “They’re having the parts built in the location where the right quality and cost is most appropriate for that part, then bringing them all together to assemble them. Whether it’s manufacturing or software development, just about any endeavor undertaken today has some of that flavor to it.”
Some companies also are taking advantage of advances in technology to cross-couple their systems with those of their customers. “If you’re a smart company today, you want to get your system closely embedded with your customer, so that you lower the cost, improve the service, and have a link there that allows you to be much more of a partner.”
He notes FedEx as an example. “FedEx did a brilliant thing by allowing customers to have access to their system, so they could give them tracking capability. That’s a simple example, but incredibly powerful.”
What Companies Should Know
As companies contemplate moving into the international arena, Trafford said they need two major things: the right supply agreement and a knowledge of the local supplier arrangement.
“You must understand the importance of having local content in both people and services,” he said. “For example, in IT, you’re not going to import work stations from North America to France. You buy them locally.”
Companies also need a standard network enterprise to avoid people becoming ‘islands’ as they are added to the operation. “If you’re going to have an operation in Singapore, for example, it’s very easy for the people in Singapore to become isolated from what goes on in the rest of the operation,” said Trafford. “One of the most powerful ways to maintain that flow of information –and manage the costs — is through your network.”
One of the ways in which the network contributes to a global operation is through the distribution of common applications. Trafford specifically noted the importance of all units of a company, wherever they are in the world, using the same accounting system. The provision of such common applications is cost efficient, he said.
“The best bet you can possibly make today is that bandwidth is going to increase and get cheaper,” said Trafford. “So when you’re doing the planning on how you centralize or decentralize, you need to look carefully at the common systems you want everybody to use and plan on feeding them out.”
The Management Role
Even when a company plans to outsource, Trafford stressed that they need to retain the right level of centralized control over the infrastructure. That is essential for dealing with such issues as Year 2K problems.
Finally, he said, companies need to understand that remote management of the infrastructure is going to be vital to providing top quality service. “You can’t do it on a hands-and-feet basis globally,” said Trafford.
Moving into the international arena can be a bumpy road, fraught with challenges, for any company. Trafford acknowledged that fact. “It’s always difficult to operate outside your home territory,” he said. His recommendation is straight to the point: Call on a company with international experience to light the path.
Lessons from the Outsourcing Primer
- The increasing demand for network services creates tremendous pressure on global networks.
- Building a global data network should be the first step in moving into a new country.
- Companies need to understand the importance of local content in both people and services.
- Standardization of applications can facilitate the flow of information and assist in managing costs.
- The remote management of the infrastructure is vital to providing top quality service in a global operation.