By Bob Violino

Today's CIOs need to think globally—and act globally. Exclusive new research by Smart Enterprise shows just how globalized business has become, and the huge impact it has had on CIOs and their IT operations. In fact, globalization affects nearly every facet of IT and the CIO's role in the organization. What's more, at a time when the sluggish U.S. economy is straining many IT projects, globalization provides CIOs with a new opportunity to invest in technology that can help their organizations expand into new markets.

While most enterprises already do business internationally, what's new is the central role IT now plays. CIOs support international expansion efforts, and they are expected to help their organizations succeed in today's global marketplace.

Indeed, more than 60 percent of IT executives in the U.S. work for organizations that serve customers outside the country, according to the Smart Enterprise "2008 Globalization & IT" survey. Nearly the same percentage of U.S. respondents have business operations or offices outside the U.S. Half have non-U.S. product suppliers, and more than 40 percent work with international third-party technology service providers or shared services. In fact, just one-quarter of the 350 executives worldwide surveyed by Smart Enterprise work for organizations that operate only in the U.S. (For more on the survey methodology, see "How the Globalization & IT Survey Was Conducted")

Other key findings of the Smart Enterprise "2008 Globalization & IT" survey:

• Globalization has led CIOs to increase spending in areas that include security, IT infrastructure, network infrastructure and compliance. For example, more than 40 percent of the survey respondents say globalization has driven them to spend more on IT infrastructure this year.
• Globalization affects the way IT executives address several key issues, including planning, collaboration, leadership and compliance. For example, when it comes to leadership, globalization affects the way over 65 percent of IT executives manage up, and how 75 percent handle relationships with partners and suppliers.
• The leading driver of accelerated IT projects is globalization. In fact, among respondents who are accelerating major projects, nearly 70 percent attribute the acceleration to globalization.
• To support global efforts, organizations rely on a variety of technology solutions. These include network and end-point security, online collaboration, teleconferencing, and network and storage consolidation and virtualization.
• To help support global issues, technology leaders believe they must enhance a number of their own professional skills, including their understanding of business issues, leadership skills and technical skills.

Typical of today's globalized enterprise is Achievo Corp., an IT services provider with headquarters in San Ramon, Calif., and offices in Canada, China, Germany and Japan. "Almost everything we do has global implications," says Bernard "Bud" Mathaisel, Senior VP and CIO at Achievo. "That's the business model we have."

Mathaisel says doing business globally has become a way of life at Achievo. For example, he recently began a workday at 7 a.m. by speaking on the phone with colleagues in China who, 12 hours ahead, were just completing their day. Next, he switched to a conversation with staffers in Germany at the end of their afternoon. Later, Mathaisel got in touch with workers in Canada during the middle of their afternoon. He closed his own workday by conducting a video linkup with co-workers in China as they prepared to go to work the next morning. But Mathaisel is quick to point out that his behavior is no exception; being global, he insists, is pretty much a given for any major enterprise. "Even if your business is entirely local, the suppliers you depend on for services and materials may not be," he adds.

Globalization also presents CIOs with new opportunities to become major business partners. Globalized companies are expanding operations through the use of complex supply chains, the need to do business in multiple countries, and the increase in offshore outsourcing. All these can benefit from CIO leadership, says Andrew Boyd, Chief Research Officer at the Aberdeen Group, an IT research and analysis firm. "Globalization is a business issue, not an IT issue," he adds. "And the CIO's role is a business role."

Still, organizations need to build IT infrastructures that can support global business, Boyd adds. That's certainly the case at Novartis Consumer Health (NCH), a division of the Swiss pharmaceuticals company. At NCH, an increased need for global IT operations is being driven by the company's business needs. The company develops, manufactures and sells products worldwide; it maintains operations on every continent; and it runs standalone businesses in more than 60 countries. This expansion requires NCH to comply with a growing number of regulations and operating model requirements, explains Greg Meyers, VP and Global CIO at NCH. That, he adds, "drives the need for different IT processes." Also, NCH is expanding its use of offshore outsourcing. "This gives us a truly global IT organization that can help us work better with the time-zone challenges typical in offshore relationships," Meyers adds.

At Nortel Networks Corp., a Toronto based communications equipment provider, the IT department is working through a steady increase in globalization, particularly in Asia. So says Mary Clement, the VP responsible for the company's Office of the CIO function. Nortel operates from 220 locations in some 55 countries. "We experience globalization not only as an expansion into new countries, but also as a growing mobile workforce that needs to work any time from anywhere," Clement says.

Globalization is boosting IT spending, the survey finds. Fully half the respondents say their organizations will spend more this year on information security than they did last year due to globalization. Similarly, more than 40 percent expect they'll spend more this year on IT infrastructure technology. Other areas of IT that will see spending increases during 2008 include network infrastructure, compliance, 24x7 operational capabilities, collaboration tools, IT end points, outsourcing, and risk management, the survey finds.

Nortel, for example, has increased its IT spending to both support business growth in low-cost countries and equip its mobile workforce with portable devices and applications. The company also is focusing on securing information to comply with government export controls and local privacy laws, Clement explains. "In these areas we're spending more time, more planning and more tracking, and we're dedicating more infrastructure," she says.

Increased spending on IT security as a result of globalization is the order of the day at NightHawk Radiology Services. The Coeur d'Alene, Idaho, company provides around-the-clock radiology services from facilities in Australia, Switzerland and the U.S. to physicians located anywhere around the world. One big reason why NightHawk has increased its data-security spending is that the U.S. government has instituted new requirements which limit access to patient healthcare information based on citizenship and location, explains CIO Michael Karaman. "This led us to implement a number of security provisions that support these requirements and also provide sufficiently granular access controls," he adds.

Some factors of globalization are causing CIOs to boost IT spending even during these slow economic times. About one-third of respondents who say they're spending more attribute it to increased financial pressures resulting from globalization. Other major factors for increased spending include adapting to new, cross-cultural business processes; the need to maintain transborder governance and security; outsourcing; localization; and disaggregation of the supply chain, according to the survey.

Global Impacts
Globalization also affects how technology executives address planning, collaboration, leadership, compliance, staffing, resourcing, application development and deployment, and IT infrastructure. About 70 percent of the survey respondents say it has extensively or somewhat affected the way they address each of those issues. In particular, globalization has had an extensive impact on planning, say 40 percent of the survey respondents.

When it comes to IT planning, globalization affects the way executives plan and develop their technology investment strategies, align IT with the business, assess risk, choose which applications and business processes to support, and plan and forecast budgets. It also affects how these executives are regarded by and consult with other C-level executives. "Planning, project management and risk identification are certainly more complex with globalization, and the total potential risk is typically greater," says Karaman of NightHawk. For example, different countries have different types of healthcare coverage and data-confidentiality policies, he says. This means NightHawk must offer variations in its service offering.

Because NightHawk maintains offices in multiple countries, "the level of complexity goes beyond that of offices distributed in one country," Karaman says. For example, NightHawk IT must account for broad time-zone differences, various employment rules, global recruiting, and challenges in acquiring and supporting network bandwidth and equipment.

Collaboration is also being affected by globalization and how organizations assess supportive technologies, architectures and applications. It is also affected by investments in group decision-support systems, in Web 2.0 technologies and Web-based groupware, and in shared virtual environments.

On leadership, a majority of respondents to the Smart Enterprise survey say globalization has affected the way IT executives manage their staffs, handle supplier and partner relationships and handle customer relationships. It also changes the way IT executives are sought out for their knowledge and expertise by their CEOs and boards of directors, and it even affects the way IT leaders manage laterally.

In Compliance
Compliance is another area of IT management that is affected. In fact, globalization affects how IT executives manage risk; support and adhere to international standards and regulations; and support the development of new international standards and procedures, according to the survey.

The survey also finds that a move to global operations affects a host of personnel issues, including finding the right skills when and where they're needed; controlling staff costs; viewing workforce-related risk; using temporary IT workers; aligning staff to meet customer service requirements; supporting a virtual workforce; and decentralizing the reporting structure. Organizations also face new challenges such as attrition among knowledge workers and the need to manage IT employees in other countries. "There are a lot of moving parts in terms of what the CIO needs to take into consideration when looking at multiple locations and the support infrastructure you need," says Boyd of Aberdeen Group.

Take, for example, staff attrition. Nortel's Clement admits that turnover in foreign countries can be high, especially at third-party vendors that provide outsourced services from these countries. Then there's compliance. Clement says ensuring compliance with privacy and other country specific laws and regulations complicates IT operations by requiring that the company manages information appropriately and offers staff access to that information. "We need to provide support and technology to enable our increasingly global and mobile workforce," she says.

Mathaisel of Achievo adds that globalization has complicated such things as the governance model and the calendar of events, including, he says, how you hold meetings. "It has complicated the nature of understanding roles, responsibilities and skills, and it has complicated the nature of provisioning of services," he adds. At the same time, globalization has brought the benefit of speed. "Work can move with the sun," Mathaisel says.

In a world where computer viruses, hackers, phishers and other threats are prevalent, it's no surprise that IT security is one area of high concern for IT executives supporting globalization efforts. For example, more than three-quarters of the respondents say they're concerned about how they ensure security.

At Nortel, for example, the IT department has concerns about security, particularly in how it ensures that government export controls on information and technology are followed. This can be challenging, because Nortel has more than 3 million documents in its knowledge management systems that must be classified, labeled and secured, Clement explains. Globalization also complicates identity management, she says: "We need to know country-of-origin and country-of-work to manage access in compliance with export controls." Also, because different countries offer different levels of government protections to address spam and malicious software, Nortel IT must ensure that its security practices are sufficient to protect the company's networks and systems regardless of their location, Clement says.

Certain countries receive more scrutiny than others, whether deserved or not. For example, Achievo's Mathaisel says customers often ask about the security of the company's facilities in China. To help quell concerns, Achievo recently obtained the highest level of ISO certification for 15 dimensions of information security — including intrusion prevention, disaster recovery and incident management — for its entire Asian operation. Beyond that, the company puts all employees through what it calls the Achievo University training program, in which they learn about multiple facets of security. Achievo has also deployed security measures, such as strict limits on access to client data and the use of secure rooms in facilities in China where its teams work on client projects.

While globalization has both accelerated and curtailed IT projects, for the majority of organizations the move to international operations has sped up technology initiatives, the Smart Enterprise survey finds. More specifically, nearly 70 percent of the executives are accelerating major and strategic IT projects due to globalization. Only 28 percent have curtailed projects due to globalization.

To support their organizations' global initiatives, IT leaders are relying on a variety of technology solutions. Among the most important, the survey finds, are network and end-point security. These solutions were cited by more than 80 percent of respondents as being either "most important" or "somewhat important" for global competition.

Other technologies that play a significant role in globalization efforts include collaboration tools, teleconferencing, network and storage consolidation and virtualization, remote infrastructure management, business intelligence/decision support tools, cost-effective storage, unified communications, wireless computing and mobile applications, risk management tools and multilingual content management tools.

Nortel, for one, uses many of these technologies, Clement says. For example, the company can deploy end-point security to quickly contain the impact of any computer viruses and other malware that are sent to attack the Nortel systems. Also, with Nortel's global workforce, collaboration tools and teleconferencing are essential to sharing information and working together regardless of location, Clement says.

Nortel IT is also consolidating storage and using virtual servers to both ease support requirements and reduce costs. "This links closely to our remote infrastructure management strategy, which enables us to provide 24x7 support centrally using a follow-the-sun support model," Clement says. The model requires fewer resources, costs less and improves quality because support personnel are working during normal working hours. "This means less on-call or overtime pay, and support providers are more alert and thinking more clearly than they would be if they had to address an issue after being awakened from sleep," Clement says.

At Novartis Consumer Health, CIO Meyers relies heavily on teleconferencing for his global operations due to time-zone differences between North America, Europe and Asia. "We have very small windows of time in which to conduct effective team meetings," he says. "This means we often need shorter, more frequent meetings, rather than the traditional three-hour staff meeting or half-day strategy reviews." For these shorter meetings, he adds, teleconferencing is ideal.

The Novartis IT team is also exploring new collaborative technologies, such as high-definition videoconferencing and Web conferencing with webcams. "With the rising cost of business travel, we have to think of a better way to connect global teams," Meyers comments.

Sharper Skills
IT leaders also feel the need to enhance some of their own professional skills to cope with global efforts. For example, nearly 70 percent of survey respondents say they need to significantly enhance their understanding of business issues. Other areas in need of improvement include leadership skills, technical skills, operational skills, vertical-industry knowledge, and investment and financial skills. Meyers of Novartis says the skill most often overlooked when building a global organization is multicultural awareness. "Because many people have not managed others outside their culture before, there is a huge learning curve regarding how different cultures deal with risk, uncertainty, chain of command and project management," he says.

To gain these new skills, IT executives plan to seek advice and training in several areas, the survey finds. The areas cited most frequently are investment and financial skills, technical skills and vertical-industry knowledge. They plan to acquire these enhanced skills mainly with help from professional publications (including magazines and journals), colleagues and peers, industry events and webcasts, consultants, online training, and university and continuing education courses. Regardless of how IT executives gain these skills, it's vital that they continue to expand their horizons. Only in this way can CIOs help lead their organizations into an increasingly globalized business environment.

Bob Violino is a freelance writer in Massapequa Park, N.Y. He covers a variety of business and technology topics.