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INFRASTRUCTURE CONSIDERATIONS IN GLOBAL INTEGRATION

Regardless of how strategically you approach the inte­gration of your new global hierarchies, you will ulti­mately fail to fully integrate your new organization if your communications and technological underpin­nings—your infrastructure—is ill conceived. If we are correct in our assumptions that the due-diligence pro­cess during corporate growth has been de-emphasized, it follows that networks, e-commerce strategies, and voice and data communications issues are afforded less attention than is optimal given their importance.

Based upon interactions with several of our clients it would appear that many believe the Internet will pro­vide all the answers as companies approach the techni­cal aspects of globalization. Such is not (yet) the case. Certainly the Internet has gained wide acceptance. In fact, Benjamin Holt, in a presentation for the Global Policy Forum, confirms that, while it took radio 38 years to move from a standing start to 50 million users, and while the personal computer took 16 years to achieve the same acceptance, the Internet achieved the 50 mil­lion milestone in only 4 years.

Mapping your infrastructure strategy should be driven by the type of corporate integration needed to produce desired and optimal results. For instance, where diversified corporations are linked only at the strategic planning, analysis, and thereby financial level, and the operating units routinely only report financial results on a periodic basis, the Internet may provide a reason­ably reliable pipeline to upload those results. Of course, you must assess the security aspects of using a public communication facility such as the Internet for confi­dential information and design appropriate safeguards. In addition, if operating units reside in countries where the Internet is not completely reliable, you must define an acceptable window during which corporate informa­tion can be "rolled up" to the parent and identify alter­native reporting methods should the Internet not be available at all for some period of time.

Interestingly enough, the application services pro­vider (ASP) model may offer a viable alternative solu­tion for firms linking at the strategic level. An ASP can provide both the financial software and the elements of the infrastructure needed to move financial and strate­gic information in a timely fashion. In addition, it is the service provider who accepts responsibility for re­sponse time and security. While we do not specifically endorse the ASP model, it may be well suited to this sort of globalization challenge.

Where operational data is needed in "real time," de­signing your infrastructure takes on a greater level of complexity. While you might accept a temporary dis­connect when rolling up financial data, vertically and horizontally integrated companies often need interop­erability at the transaction processing (ERP) and sup­ply chain management levels. Resource sharing that will ultimately lead to competitive advantage can only be realized if you can interact with your operating units wherever they may reside. In this scenario uptime and the reliability of the infrastructure is mission-critical.

 

The first problem in full operational integration is the virtual certainty that your operating units use vari­ous types of ERP software. Seldom do you have the luxury of standardizing on one enterprise system world­wide. Time and information systems budgets will not allow this approach in most cases.

 

To further complicate matters, the Internet is based upon relatively new technologies and was not specifically designed to seamlessly integrate with your ERP legacy sys­tems. That's where new elements of the infrastructure will play an increasingly important role. A new industry has sprung up that anticipated several business trends includ­ing merger and acquisition "mania," the need for speed in systems deployment and the inherent dissimilarities

among various ERP and other enterprise systems that can be found in growing organizations. Enterprise applications integration (EAI) is a Web-friendly software element that rides atop your infrastructure and provides a means for heterogeneous systems to do business with each other.

For instance, if your U.S.-based firm had standard­ized on a Baan ERP system and acquired an organiza­tion in the U.K. that was a satisfied user of SAP, EAI would provide the toolset necessary to allow these sys­tems to work together, either over the Internet or as part of a large private network. Many EAI systems are based on the extensible markup language (XML) technology, which had its origins in Internet Web development. At the risk of getting technical for a moment, XML is all about the idea that certain groups of people have simi­lar needs for describing and organizing the data they use. Like the popular Web development language HTML, XML is a set of "tags and declarations"—but rather than being concerned with formatting informa­tion on a page, XML focuses on providing information about the data itself and how it relates to other data. It is easy to see that any technology concerned with mov­ing data around your pipeline and allowing you to in­terpret its meaning and take appropriate action can be an important element of your infrastructure.

Given that organizations linked at the transaction processing and supply chain levels need to function in "real time," you should also consider a hybrid approach to building your worldwide infrastructure. For the fore­seeable future it will likely include both public and pri­vate networks, or wide area networks (WANs), interacting through high-security firewalls to protect your valuable and competitive company information. This approach allows you to overcome the challenge of an unreliable Internet facility in emerging countries. Of course, build­ing this technologically complex infrastructure will re­quire attention to the business drivers as well as the technologies. Considerations such as the sourcing of tele­phonic services and switching hardware and software will become important to globalization planning. It is an ex­pensive albeit absolutely necessary exercise.

In the final analysis, building a solid and reliable in­frastructure is vitally important to the integration of new hierarchies. There are very few shortcuts in building this "pipeline" and it is not an inexpensive proposition. None­theless, it cannot be overlooked and should be consid­ered a fundamental part of your integrated organization.

To Be Continued

For balance of this article, click on the below link:

Lean Manufacturing Articles and then click on Series 13


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