by Richard Sykes

Rethinking globalisation

Mar 21, 2011
CareersIT LeadershipIT Strategy

London’s City University is running a Masters programme in Information Leadership (MIL), a two-year commitment to spend many challenging weekends in the classroom and engaging in projects with your fellow students. The objective is to speed the development of a new generation of IT leaders.

I served as one of three judges for a scholarship associated with the programme. Candidates had submitted short essays, and reading these essays reminded me that behind people’s use of particular key words often lie mental models that can both scope but also restrict the user’s view of the world.

In our fast-moving industry these mental models can rapidly move out of alignment with reality — not good news for an aspiring IT leader or entrepreneur.

Offshoring of IT? The mental model here for many is of the movement of UK IT jobs overseas in the search for cheaper professional resources. A more accurate mental model is of the competitive sourcing of professionally-enabled IT services from elsewhere — a reality that suggests the possible flow of IT services back the other way, which there is.

In fact the UK runs a very strong and sustained balance of trade surplus in IT services.

The Organisation for Economic Co-operation and Development (OECD) does an excellent job in interpreting the complexity of statistics for trade in services. Its most recent publication, released in January 2011, details the years 1999-2008.

In 2008, the UK imported $5.6bn (£3.4bn) worth of computer and information services but exported $12.9bn (£7.9bn) worth. The UK is winning through as a competitive global offshoring location — at least for the moment.

Which leads me to the word globalisation, so very much in use today. In this new decade globalisation certainly embraces the rapid growth of the international trade in services — and the accelerating entry into the global markets of the BRIC countries.

But let us explore the mental models that underlie the word in our industry. Is globalisation solely about international trade development in IT services?

Is it about investment in locations around the world to underwrite that trade development? Or is it also about investment in IT business development within particular geographies?

Is innovation the prerogative of more advanced market geographies, or equally the prerogative of younger, developing market geographies?

Certain large players in our industry are now moving towards a mental model of globalisation that is about investing in people, market and innovation resources in targeted geographies across the globe — investment that has both local and global dimensions.

IBM is undoubtedly setting the paceand its new Global Process Services business structure illustrates this.

At the other end of the vendor scale is the fast growing venture Ffastfill, which is based on very specific market expertise in exchange-traded derivatives.

It provides specialist SaaS services from operational centres in London and Chicago (and a software development centre in Prague) to banking clients in the USA, Europe, Asia (including China) and Australia, with its strong growth further underpinned by a steady series of targeted acquisitions in the Americas, Europe and Asia. Small tech enterprise globalisation in the fullest sense of the word.

My background is in the chemical industry, so I observe with interest the $1bn (£614m) investment deal between Ineos (a major manufacturer of petrochemicals, speciality chemicals and oil products, with strong European roots) and PetroChina Company (China’s largest oil and gas producer and distributor).

It gives PetroChina a significant equity stake in key Ineos European oil refinery assets to underwrite development of its global trading businesses: and giving Ineos a strengthened balance sheet and broader opportunity to develop its technology business in China.

Here is the strategic face of globalisation writ large — a richer mental model behind that key word.

Back to our aspiring City University MILs. I have already written of the emerging role of the CIO as Master Operational Strategist for the Enterprise.

The MIL students’ mental model of globalisation should lead them to reach out to vendors, large or small, who can bring them competitive edg’ from wherever it is best created, sourced and delivered from around the world.

Their contribution as functional leaders to board debate should be fresh insights into how their enterprise can speed the development of its own globalisation through effective partnerships with vendors whose business models and globalisation align the most effectively.

And the message for our IT vendors? Look to IBM, Ffastfill and Ineos, and redefine your mental models of what globalisation now means. Even as a young UK tech venture you need one foot in the global and a clarity of your intended globalisation strategy, right from the start.

Richard Sykes was vice president of IT at ICI in the 1990s and is now a consultant