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 ...