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BOSTON—In response to the pressures of globalization, corporations must develop a networked worldwide business model based on a flexible technology architecture. That was the message delivered by Forrester Research analysts to attendees at the consultancys annual Executive Strategy Forum here.
The conference highlighted several successful firms: Chemical giant DuPont Corp. is seeing 40 percent to 50 percent annual growth in some lesser developed countries, said Ellen Kullman, group vice president for safety and protection at DuPont.
“In order to compete, we had to globalize; we had no choice,” said Kullman.
She advised attendees at the two-day conference to do things differently in different countries and to accept the risk of failure.
“Firms must adopt the right business models to drive their global transformation, said Forrester analyst Navi Radjou.
Companies should give up being vertically integrated and move to an ecosystem of global partners.
Further, companies should invent and market globally, he said.
Peter Weedfald, senior vice president of sales and marketing for consumer electronics in North America for Samsung Electronics America, said his companys globalization process has enabled it to change from being merely an equipment supplier to a creator of new technology.
Weedfald termed the Internet “Darwin on speed” and said that to deal with it, his companys IT organization has standardized Samsungs offices globally so that executives at the $57 billion company can move from one country to another with the same IT infrastructure.
Forrester analyst Bobby Cameron said CIOs must play a role in business transformation.
“Networked global business model demands enterprise agility and vertical disaggregation,” he said.
Practically speaking, he said, CIOs must first stabilize global infrastructures as well as business processes, then move IT operations from being a cost center to becoming an innovation center, he said.
Ralph Szygenda, group vice president and CIO of General Motors, had the difficult task of discussing GMs processes even as the company teeters on the edge of bankruptcy following poor financial results.
“There are a lot of legacy costs with a larger, older corporation,” said Szygenda, noting his companys $5.5 billion in health care costs, as well as vast expenditures on pensions.
He hastened to defend the companys products, however, noting that GM vehicles are the top sellers in China, even though they are lagging in the United States.
He said the recent spike in gas prices created a dislocation that drove U.S. customers away from SUVs and trucks, both GM strong points.
He said the IT transformation that he initiated when he arrived at GM nine years ago has created a company that has networked, global processes that are highly efficient.
He noted that GMs product development cycle is half of what it once was and that the companys IT costs are $1 billion less than they were when he joined the company.
He said GM has an effective global supply chain in place.
“We procure $90 billion in materials and services that show up just in time. We also ship 8 million vehicles in the world. … Weve made some good changes. Is it enough? Thats always debatable,” said the CIO.
Szygenda pointed out that even though GM has a fully outsourced approach to IT, he keeps abreast of smaller companies with innovative technologies so as not to miss potential competitive advantage.
“Today, we buy a lot from startups as well as traditional companies,” he said.
The bottom line for a CIO, he said, is a simple one: “There is only one measure for a CIO that is value in transformation. IT has to transform the business.”
Stephen David, retired former CIO of Procter & Gamble, said that company had transformed itself into a “consumer-driven supply network,” by seeing things through the consumers eyes and aligning business and IT.
He stressed the need for IT managers to speak the language of business and abandon technical jargon and purely technical thinking.
“IT is not an island. Its an enabler for businesses. Alignment to the business is critical. Without it, you will fail.”
In outsourcing, he said, “Youve got to pick outsourcers and hold them accountable for innovation. The outsourcer will never know your business as well as you.”