As you would expect of anyone in his position, Chris Scalet, CIO at International Paper Co., knows how to make a point. But when his words travel across a global corporate network that spans many cultures and languages, his point can get lost in the translation.
By the time the company's directive "gets down to the person who is actually implementing it in Poland or Russia or France, it may not be what you totally intended" because of cultural and language issues, says Scalet. An overseas project can take twice as long to implement as it does in the U.S., he says.
"It's a situation where you just have to communicate and recommunicate - you have to overcommunicate," says Scalet, who manages an IT staff of 2,200 in the U.S. and in 10 countries in Europe, South America and Asia from his company's Purchase, N.Y., headquarters.
Scalet is hardly alone. Effective communication, already a challenge for managing domestic staff, is a top concern for CIOs who oversee large international IT operations. But it's far from the only problem.
Companies with extensive international operations face uneven telecommunications support, coupled with high costs. Electronic exchanges are hindered by a lack of common standards for routine business transactions. Regulatory issues such as privacy are also beginning to emerge as potential problems.
But while companies like International Paper, General Motors Corp. and Baxter International Inc. have been implementing global communications systems that strive to integrate even the most far-flung operation into a seamless network, CIOs still spend a lot of time traveling to meet with people and fix problems.
To communicate overseas, Detroit-based GM uses telephone, video and Internet meetings. "But nothing replaces [traveling to and] working locally in the countries," says Jose Eiras, GM's CIO for Latin America, Africa and the Middle East, who spends about half of his time on the road.
But that's not to say networking can't optimize international communications, says John Moon, CIO at Baxter International.
The Deerfield, Ill.-based health care company, which has about 1,100 IT employees, with roughly half working outside the U.S., is developing something it calls Baxter DNA - Digital Network Access - using a virtual private network (VPN) as part of its goal to have "anywhere, anytime access" to business information and its employees.
The communications improvements should allow Baxter to expand its collaboration and electronic-learning capabilities globally, offering consistent training to sales forces and clinical specialists, says Moon.
A good communications network can deliver timely and consistent messages, particularly in training, says Moon. However, he agrees with Eiras that face-to-face meetings are irreplaceable.
Nevertheless, U.S. companies still have to contend with uneven and unreliable communications in overseas markets. Many countries have state-owned telecommunications monopolies with limited bandwidth, shaky infrastructures and high costs.
"Communication cost is a major problem," says Eiras. Communication circuits in many nations, where deregulation hasn't arrived, can cost 10 times more than in the U.S., he says.
"There are no really strong global providers of telecommunications services internationally, so you have to deal with multiple people," says Scalet.
For its part, International Paper has to deal with a plethora of telephone companies, and in some regions, it can be an ordeal. In Eastern Europe, for instance, it can take six to nine months to get a telecommunications connection installed at a new facility, according to Scalet.
Getting around this problem takes some diligence and patience, says Eiras. Companies need to invest in competent international staff who can deal with the technical limitations and "are able to explore the opportunities," he says.
For instance, immediately following the recent deregulation of the telecommunications industry in Argentina, GM installed voice over IP, improving data connectivity while saving the company "a bundle" in voice costs, says Eiras.
Eiras also recommends keeping close tabs on infrastructure projects and availability of services. For instance, GM's Internet car sales site in Brazil faced potential performance problems because the site was hosted in the U.S. but linked to Brazil via satellite. Luckily for GM, it knew of a major carrier that was testing a new international fiber service and was able to solve the problem and launch the site on time.
Fortunately for U.S. companies, many countries are recognizing that they have to make legal and infrastructure improvements to attract foreign businesses, says Bruce McConnell, a former White House official who led the International Y2k Cooperation Center and now runs Washington-based consulting firm McConnell International LLC.
"An increasing number of countries realize that they have to play the game if they are going to get the benefit of the New Economy," says McConnell. "The trend is to deregulate and basically open up to the forces of globalization."
Vietnam is a prime example. Companies operating there today face such obstacles as a government firewall that can control information flow, limited bandwidth and high communications costs. But the country has been considering liberalizing its government-controlled telecommunications market since the approval of a U.S. trade agreement in July, says Tam Le, an IDC analyst in Ho Chi Minh City.
Speaking in Tongues
Globalization is also affecting corporate culture. Firms are stressing internally the need for effective interaction with worldwide offices. "We have to keep constant reminders that how we communicate to people in the southern part of the United States is not the same language that people speak over in Eastern Europe," says Scalet.
Senior IT managers also have to keep in mind that they're part of a global enterprise, says Moon. "You have to realize that the landscape is bigger than just the geography you're in," he says.
As companies increasingly expand in different countries around the world, senior IT managers are coming under pressure to learn foreign languages. In Europe, as in many other countries, it's common for managers to speak at least two languages.
International Paper's 75 international IT managers are all multilingual, and the company has hired instructors to teach French and Polish to some of its employees working at its U.K.-based data center, which is one of two data centers operated by the company, says Scalet, who speaks some Spanish.
At the University of Central Florida in Orlando, which has some 600 students enrolled in its IT undergraduate and graduate programs, students are encouraged to learn a foreign language to prepare for international challenges. "Our students need to understand these different cultures," says Paul Cheney, chairman of the university's MIS department.
Cheney says he's also beginning to see some companies show a preference for hiring IT graduates who know foreign languages.
Keeping an Open Mind
But IT managers who know only English shouldn't start panicking about future career prospects. A second language isn't that important, according to Doug Watters, a partner in the IT management consulting practice at PricewaterhouseCoopers in New York, which has some 160,000 employees worldwide.
"In most of the major economies that Americans deal with, the businesspeople are quite fluent with English," he says. But managers may still face problems working overseas.
"Most Americans are less open to trying to understand something that is different," says Watters. "[It's an] American characteristic - we're relatively unexposed to the rest of the world." Managers considering jobs with overseas divisions should be open to trying to understand different ways of operating, different ways of dealing with authority, and different ways of coming to agreement and consensus, he advises.
Understanding local cultures "remains a challenge for multinational companies. A capable and trusty local general manager or chief operating officer is important to handle local cultural differences," says C.M. Chiang, managing director of market research firm IDC's Taipei, Taiwan, office.
Cultural differences aren't the only problem. The advent of regional business-to-business exchanges has brought with it a slew of data communications problems for global firms.
"There is no international standard for data communications, and that is going to cause us significant grief," Scalet says.
For instance, an electronic purchase order or invoice used in Europe is typically different than one used in the U.S., "so we are going to be required to translate our communications into two different formats," says Scalet. Since there are dozens of electronic formats in use throughout the world for exchanging business information, "it's going to drive our costs up," he says.
Privacy and security regulations, as well as different tax structures, are also beginning to emerge.
Baxter International is working to enhance its security, privacy and confidentiality policies in response to privacy regulations that are emerging in Europe and elsewhere. The company has privacy experts working with local authorities "to make sure that we understand what we can do and what we can't do," says Moon. But for now, the rules aren't affecting Baxter's data exchanges.
But privacy rules - particularly the European Union's tough data protection laws - are only beginning to take effect and haven't been tested yet.
Europe is signaling a willingness to play tough on this issue. For instance, Santa Clara, Calif.-based Yahoo Inc. was recently ordered by a French court to prevent French citizens from trafficking Nazi paraphernalia on the Yahoo site.
"The Europeans are not accepting the argument that you can't cut off Web sites," says David Aaron, a former official at the U.S. Department of Commerce who helped negotiate the European Union's "safe harbor" agreement and is now an attorney at Dorsey & Whitney LLP in Washington.
The safe harbor guidelines, which went into effect in November, provide rules for U.S. companies transferring data out of European Union countries. U.S. firms are considered to be in compliance with Europe's data protection laws if they voluntarily agree to follow a certain set of privacy practices.
Worldwide, U.S. firms face the worrisome prospect of varying rules, as countries adopt different laws, says Aaron.
In the meantime, companies are turning to international markets for growth.
"Our ability to have IT leadership who can scale and expand internationally is going to become an imperative," says Scalet.
Global IT Issues: A Primer
Companies with overseas operations face a number of obstacles:
-Data exchanges: There are no international standards for doing business electronically. Differences in formats begin at the most basic levels. For instance, Asian languages often use double-byte characters that consume twice as much storage space as single-byte characters used in Western languages, according to Kimberly Trudel, a vice president at WebMethods Inc., a Fairfax, Va.-based provider of international business applications. There's an ongoing United Nations-sponsored effort to try to address such issues.
In the U.S., electronic invoicing is evolving to become more Internet-based, while in Europe, companies are just beginning to adopt Internet-based invoicing. As the rest of the world moves toward e-commerce, there will be greater demand for a common standard for electronic messaging, including invoicing, according to an International Paper official.
-Communications: Jose Eiras, CIO for GM's Latin America, Africa and Middle East operations, recommends that companies use VPNs overseas. In Ecuador, a country with severe limitations in communications infrastructure, for instance, a GM VPN is providing reliable connectivity, he says.
-Culture: The common advice from CIOs who work for multinational companies is to work hard at communicating with overseas counterparts and to be sensitive to cultural differences. Companies also have to be sensitive to mores and ethics on a country-by-country basis, advises C.M. Chiang, managing director of IDC's Taipei office. A writing style that may be humorous to Americans could be offensive to someone overseas.
- Patrick Thibodeau