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IRM in Multinational Corporations
Approaches to
Strategic Planning for
information Resource
Management (iRiVI)
in iViuitinational
Corporations
Overview
The difficult and seemingly unmanageable
problems and frustrations associated with
strategic planning and control of the multinational
information resource management function (IRM)
in a large, decentralized, and multi-division
environment is the subject of this research. Many
multinational corporations have yet to come to
terms with the interaction and complexities that
geographical, language, technological, organizational, productivity, regulatory, and management
differences have imposed on their transnational
IRM functions.
By: Gad J. Selig
A growing number of multinational corporations
{MNCs) are utilizing computer based information
systems, office automation and administrative
support systems, and telecommunications
systems as critical tools in managing and monitoring their global businesses.
Abstract
As the resources, scope, and importance ot the
information resource function grow, as pressures
for greater productivity improvements mount, and
as competitive pressures increase, more senior
managers are forced to concentrate on better
ways of managing rapid change to capitalize on
new opportunities, reduce their risks, and expar>d
their commitment to computer based information
resources in the office, factory, and home.
Multnational corporations (MNCs) face increasingfy
higher rewards and risks when choosing amongst alternative investments for their computer and communications based information systems. The multi-layered
management and technical issues and decisions confronting multinational corporations are seemingly
endless and require new insights.
A rapidly growing number of MNCs are utilizing
computer based information systems, office automation
and administrative support systems, telecommunications systems, factory information systems, and home
information systems as critical tools in managing and
monitoring their global businesses. As the resources,
scope, and criticality of the "information commodity"
grow, more senior managers are being forced to concentrate on belter ways ot planning for rapid changes to
capitalize on new opportunities and reduce their risks.
The conclusions and recommendations presented in
this article are based on an examination of the actual
Information resource management (IRM) planning and
coordination practices of 25 large multinational corporations as well as an indepth review of two case
studies.
Keywords: Strategic planning. Information Resource
Management, office automation, telecommunications, multinational coordination
practices, key requirements, key ideas,
framework and components
ACM Categories; 2.0, 2.2. 3.50, 8.0
The traditional information systems and telecommunications functions have struggled with
long range planning for a number of years. All too
often, the information systems professionals
engaged in an activity which they called planning,
but which was, in reality, little more than a
combination of budgetary reviews, extrapolations, and tactical equipment decisions. To further
complicate the scene, the growing penetration of
mini and micro-computers in the office and
administrative environment has created many
more planning and control issues which have yet
to be adequately addressed.
In addition, there are many more issues today
then ever before: the degree of centralization
versus decentralization, obtaining greater senior
management commitment, proliferation of
technology and vendor offerings, the multitude of
internal organizational styles and political loyalties,
and the cultural differences between individuals,
functions, divisions, companies, and countries.
MIS Quarterly/June 1982
33
tRM in Multinational Corporations
These issues must be addressed in the IRM decision and strategy development process, if it is to
be successful.
This article had its genesis in two primary events.
The first event occurred white the writer served
for several years on the corporate staff of a major
multinational corporation. There, he was able to
observe firsthand the difficult problems
associated with strategic planning and coordination of the multinational computer based information resource functions. The second event was
stimulated by academia, where the writer was
seeking a pragmatic, and useful research topic for
a doctoral dissertation. This article was extracted
from a 400 page doctoral dissertation which
addressed the issue: "How can the need for
more formal and incremental strategic planning
and control processes for the multinational information resource/management function be better
satisfied and more effectively integrated into the
business?"
Objectives
This article compares current practices and what
is being done to improve the IRM planning and
coordinating processes in large multinational
corporations with a reputation for being well
managed. While 25 multinationals, predominately
in the manufacturing and financial service
industries, participated in the overall research, the
specific practices of two multinationals, each with
sales of over $5.0 billion were closely examined
to provide indepth comparisons. One company is
managed on a decentralized basis, while the
other is centrally managed.
The two corporations were selected because of
their willingness to share information. However,
based on the request of the participants, their
anonymity Is maintained throughout the article
and they are, therefore, identified by an
alphabetic designation. To disguise further the
identity of the patiicipants, some of their more
distinguishing characteristics are provided in
broad ranges.
It is recognized that there is no universal panacea
for IRM planning and coordination for many
reasons such as: differences in management and
organizational style; industry type, products, or
services; degree of centralized {corporate) control; and the degree of technical maturity.
34 MIS Quarterly/June 1982
However, there are certain factors which help to
ensure the success of the process.
Company ' ' C " Case Study
(Decentralized Environment)
Organizational background
and characteristics
Company C is a leading industrial goods and consumer services company with worldwide annual
sales ranging between $5.0 and $6.0 billion, and
total assets in excess of $3.8 billion. Over 30%
of sales and earnings are generated outside the
United States. The company employs between
55,000 and 65.000 employees worldwide, of
which over 25 percent are international. Major
manufacturing subsidiaries are located in over ten
foreign countries. Company C is a decentralized
corporation with five major product companies.
fifty strategic business units (divisions), and over
550 plants, sales offices, and distribution centers
woridwide.
Each product company is headed by a company
president. Each company president, and to a
lesser degree, each division manager, operates
with a considerable amount of local authority and
autonomy.
All international operations are product company
oriented and, therefore, are the responsibility of
the respective product companies. Regional and
multi-product group coordination headquarters
are located in Europe, Canada. Latin America,
and the Far East.
iRM Profile
The total annual IRM budget (EDP and Telecommunications only) exceeds $70,0 million, of
which 25 percent is accounted for outside the
United States. There are over 750 professionals
in the global IRM organizations. There are over
thirty separate MIS departments. These MIS
departments have collected 52 computers from
eight different vendors. Many different vendors
are ailso represented in the office systems area.
iRM in Multinational Corporations
In the past five years, the corporate philosophy
has emphasized profit center decentralization and
greater business unit responsibility, stopping just
short of a decision to become a holding company.
As more and more of the corporate IRM functions
were being decentralized, a number of new and
important opportunities for central coordination
began to be marketed. They included a
corporate-wide telecommunications facility
(voice, data, etc.) a global timesharing facility, and
an office automation planning unit.
Strategic IRM planning and
coordination practices
During the 1970s, the company was transformed
from a highly centralized style to a highly decentralized style. Thus, to bridge the transformation,
the continuity of an effective IRM planning and
coordination process in a decentralizing environment is a complex and difficult task. It requires,
among other things, a great deal of education
and specific direction setting mechanisms. For
example, some of the direction setting
mechanisms which were utilized by the corporate
MIS department, to influence the direction of
the company-wide MIS Program included the
following;
1. Company-wide MIS Strategy —
Several company-wide systems
strategies were approved by corporate
management and were being pursued
by the MIS staffs throughout the company (e.g., minicomputers and
distributed processing; buy versus
make
systems
development
strategies; a companywide data network, office automation prototypes).
These strategies emanate from a
long range MIS strategy study, which
focused on the ideal characteristic of
the MIS/IRM environment five years
into the future,
2. MIS Planning Task Force — A group
of senior executives provided policy
and long range direction to the MIS
environment. Operational trends and
activities of a company-wide nature
were reviewed by this body. Also the
EDP/TC plans and programs of the
business units were presented for
review.
3. Long Range MIS Plan for Corporate
Staff — To provide a positive planning
catalyst, the Corporate MtSTC department developed the first strategic MIS
plan, which focused on the corporate
staff areas, the corporate MiS role in a
decentralized environment, and those
systems which supported major divisions or inter-divisional systems. The
plan accommodated both strategic and
tactical planning elements. The plan
was distributed to every product group
and division throughout the compguiy.
It was well received and sparked an
interest in strategic MIS Planning.
4. Guidelines — A set of general instructions and guidelines was distributed to
the business units for use in managing
their MIS programs. These guidelines
were general in nature as opposed to
specific standards and provided some
latitude in implementing MIS programs
(e.g., planning, minicomputer selection, feasibility studies, database
management, etc.). Each product
company customized these guidelines
for their own environment.
5. Company-wide MIS Program
Requisite — The requisites consisted
of a number of administrative and control items which the task force deemed
appropriate in assuring the effective
management of the product company
MIS programs (e.g., a published MIS
charter, standards and guidelines on a
variety of subjects, project control
systems, steering committees, annual
plan, long range plan, and various
forms of periodic progress reporting on
resource utilization).
6. Advanced Technology Advisory
Council (ATAC) — This group consisted of the head of each operating
company's MIS organization along with
the director of the corporate MIS staff
ATAC dealt with tactical and operating
issues affecting the company-wide
MIS program and provided recommen-
MiS Quarterly/June 1982 35
IRM In Multinational Corporations
dations on policy matters
consideration by the task force.
for
7. Quarterly Review Meeting with
Product Companies and Corporate
Staff — Senior corporate MIS management met periodically with the
operating companies to review the
progress, problems, and items of joint
interest.
8. Company Systems Meeting — Every
two years, all the managing {global)
staff of the company-wide MIS program met to discuss areas of common
interest. External and internal speakers
were invited.
9. Newsletter — Items of interest were
communicated to all MIS and non-MIS
managers on a quarterly basis.
10. Research — The corporate MIS group
conducted and published periodic
research studies on trends and new
technology that might potentially have
a bottom line effect.
11. Concurrence Review of Major MIS
Projects — An independent review of
major product company MIS Projects
was conducted by corporate MIS to
ensure technicai, economic, and
general project feasibility. This
provided product line executives with
an alternative professional opinion on
major projects.
12. Consistency Review of Long Range
MIS Plans — An independent review of
the product company plans for consistency with the company-wide MIS
Program and direction was conducted
by corporate MIS.
Unfortunately, some of these strategies
countered the decentralized thrust of the corporation. Recently, a new MIS executive was
brought in and he began to reorient the MIS roie
from a centralized and "sometimes negatively"
perceived role to a "positively" perceived role.
Concurrence reviews were eliminated. Formal
five year strategic plans were replaced by two
year plans. Various levels of formal steering
committees, which were generally used for
36 MIS Quarterly/June 1982
"protecting one's turf" were limited in scope and
composition. A conscious strategy to decentralize certain major applications and the
associated resources was also undertaken.
The corporate roie in IRM planning
Under the former MIS executive's direction, the
corporate MIS roie in IRM planning was relatively
strong. Aside from providing the guidelines and
consulting assistance, corporate MIS had the
responsibility of conducting a review of all
business unit plans. Another measure of business
unit MIS effectiveness was their adherence to
the systems program requisites previously
mentioned. These began to take on a negative
connotation. Finally, since the IRM planning process had been through several cycles and had
become a familiar tool to business unit managers,
the need for corporate support in this area had
diminished.
Business and iRM plan linkages
This case provided an excellent contrast in MIS
executive styles, which can have a significant
impact on successful business and IRM plan
linkages. Under the former regime, structural
linkages were established through the formalized
direction setting methodologies previously mentioned, such as the senior management steering
committees, the company-wide systems program
requisites, the strategic nature of the planning
process, and others. With the advent of a new
MIS executive, the linkages became much more
informal and low keyed, relying more on personality persuasion and influence than on formal
authority.
Key IRM planning issues,
strategies, and constraints
Key IRM issues identifiable in this environment
were incompatibility of hardware systems and
data element definitions across the environment,
dependence on leading edge vendor technology,
scarcity of qualified IRM personnel, and the
overall weakness of the corporate role and the
measurement of the true costs of the "information
commodity." The planning process was not con-
IRM in Multinational Corporations
sidered to have ax\y major constraints since most
business units had gone through several planning
iterations within their own environments, based
on corporate guidelines. In fact, the issuance of
the plan became the discretion of the business
unit head.
Comments from
interviewed executives
With the continued focus on decentralization and
an MIS management change, the corporate MIS
role was transformed from a high powered
formally perceived philosophy to a much more
informal and low keyed philosophy. White the
informal philosophy may be the most appropriate
survival strategy, it may not prove to be the most
effective to create strong business and IRM plan
and process linkages for the future.
Company " D " Case Study
(Centraiized Environment)
Organizationai background
and characteristics
Company D is a major industrial chemical company with world-wide sales ranging between
$6,0 and $8.0 billion, and total assets exceeding
$4.0 billion World-wide operations include
investments, either directly or through affiliates, in
more than 180 manufacturing plants and
technical centers in over twenty countries. Over
25 percent of sales are made outside the United
States.
The company employs over 60,000 employees,
of which over thirty percent are located outside
the United States, Approximately 2.500
employees comprise the corporate staff.
The organization structure includes six major
operating companies with each focusing on a
specific market segment (e.g., agriculture,
plastics). There are over 26 product oriented
divisions which report into the major operating
companies. The major operating companies are
responsible for managing their businesses on a
world-wide basis with the assistance of the corporate staff and an international staff department
IRM profile
The total annual IRM (EDP and Telecommuntcations only) budget exceeds $60 0 million, 20% of
which is outside the United States, There are over
800 IRM personnel which functionally report to
the Corporate MIS Director through either the
Corporate MIS department, corporate staff
functional MIS department, and/or product group
and divisional MIS departments
The corporate MIS department is responsible for
the planning, development, and direction of information systems, telecommunications, and office
automation systems and technologies. Two large
data centers in the United States perform seventy
percent of the processing through the use of
private data networks and database technologies
The remaining processing, as well as office
automation operations is decentralized among the
domestic and international divisions.
Some of the major corporate MIS responsibilities, as they relate to the worldwide
organization, include the following: approval of all
hardware and software acquisitions; establishing
and coordinating a career development program
for high potential MIS managers and professionals; developing company-wide standards,
guidelines, and systems; coordinating an MIS
planning council consisting of corporate and product group MIS managers and staff personnel;
and presenting a summary of the MIS strategic
plan to a corporate executive committee which is
comprised of the President, Executive Vice
President-Finance and Administration, and
General Managers of the product groups.
At the corporate level a staff consisting of five
professionals and a manager of systems planning
and technology is responsible for coordinating
all MIS planning and technology assessment
activities. Their responsibilities include, but are
not limited to, conducting research studies on
critical issues (e.g., integration architecture, common systems, transborder data flow regulations,
and manpower development), develop MIS plan
guidelines, provide consulting and review services to the functional and divisional MIS groups.
MIS Quarterly/June 1982
37
IRM in Multinational Corporations
and collate the independent MIS plans into a
company-wide plan.
Strategic IRM pfar)ning
and coordination practices
The MIS plan process closely parallels the
business plan process. Company D views MIS
planning as a continuous and comprehensive
process which integrates several management
programs essential to support the worid-wide
mission of the MIS department. Long Range
Planning (LRP), Management by Results (MBR),
and Priority Resource Budgeting (PRB) are
interrelated programs (as portrayed in Figure 1)
spanning the total MIS planning methodology.
Business plans and technology evaluations provide input to the MIS plan process.
The initial phase of Long Range Planning {LRP) is
topdown oriented and is performed by the MIS
planning council. The methodology begins with an
examination of the MIS mission and charter,
based on a review of the business plans. In succeeding steps, long range objectives are defined,
policy guidelines are Established ...