An IBM executive says globalization will have a greater impact on corporations than the Internet has had, and that companies must go beyond seeking low-wage locations to focus on a "global innovation outlook."
BOSTONGlobalization is the single biggest challenge facing corporations, and IT professionals must take a leading role in helping their companies come to grips with it. That was the theme of this years annual Forrester Research Executive Strategy Forum in Boston.
"Globalization will have a far greater impact on us than the Internet has had," said guest speaker Ginni Rometty, senior vice president enterprise business services, IBM Global Services.
Rometty, who is responsible for some $20 billionabout halfof IBM Global Services revenue, said companies must go beyond seeking low-wage locations around the world and find the best place for work to be done, wherever that may be.
Such a "global innovation outlook," she said, will be focused on innovation, productivity and growth, not just cost savings.
Forrester CEO George Colony stressed the need for innovation.
"Technology has accelerated globalization. With jobs moving offshore, we will have to innovate," he said.
Colony said companies should build global innovation networks.
For this, a flexible technology architecture, worldwide in scope and standards-based, will be essential, he said.
Rometty agreed, saying that the preferred technology infrastructure will be open, and standards and SOAs (service-oriented architectures) will play a very important role.
Rometty said companies should seek to innovate in product design, business processes and business models, and should build supply chain systems "that have visibility to labor any place in the world."
Further, she said companies should not feel they have to invent everything and be vertically integrated.
Instead, it is better to find partners that are skilled in particular areas and buy products and services from them, she said.
"Many companies are still multinationals. They should be moving to become global companies," said Rometty, explaining that a multinational is a traditional company with distinct operations in different countries, rather than a single company operating globally as a seamless entity, which is the preferred business model of the future.
"Were moving from command and control to accountability and reputation, like Wikipedia," she said, referring to the online encyclopedia that is developed by peer collaborators.
IBM itself is practicing the globalization gospel, she noted, explaining that her company is building centers of excellence around the world.
"Seventy percent of IBM is outside the U.S.," she said.
Click here to read more insight about globalization from Stan Gibson.
Colony pointed out that from 2002 to 2004, IBM has increased its employment in India from 6,000 to 24,000, while its headcount in the United States has declined from 146,000 to 140,000.
Rometty said the statistics did not point to "labor arbitrage," but reflected her companys desire to find the "best capability in the world to do what you do."
"We have always believed in free trade and a nations right to better itself. This is certainly a topic of discussion, but you must be competitive in a global world."
In her work dealing with large U.S. corporations, Rometty said that 50 percent of the CEOs she encounters are moving toward globalizing their companies.
Leaders in particular are in financial services, such as Swiss banking giant UBS.
However, she added, perhaps only 5 percent of the worlds top companies are already fully integrated globally.
"At the end of the day, nothing important changes unless people want to change and their behavior changes," said Rometty.
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