Any IT leader in the mood to complain about excessive regulation should first have a cocktail with Murat Mendi of Nobel Ilac, an Istanbul-based manufacturer of generic pharmaceuticals.
Mendi, formerly CIO and now general manager of the company, which operates in 25 countries around the world, can talk about the time an overzealous bulldozer operator started excavating the foundation for a new structure next to his company's building without bothering to first confirm what might have been underground. It tore through Nobel's Internet cables, leaving hundreds of employees offline all day.
Arguably, something like that could happen in Indianapolis too, but there would still be key differences: In Turkey, there aren't many rules or regulations regarding the protocol that should be followed before excavation begins and there are few options for restitution if something goes wrong. "That's part of the culture here," Mendi says. "If something happens, they'll say, 'Oops, sorry,' and move on."
The bulldozer incident encapsulates many of the issues CIOs in emerging markets have to deal with: an unreliable infrastructure, the twin devils of too much or too little oversight, and the need for managers to understand local culture, whether they're on-site or halfway around the world. And yet, like Mendi, tech leaders in emerging economies persevere and sometimes even find joy in conquering the seemingly endless challenges, little and big, that crop up day in and day out.
Computerworld talked with CIOs and IT experts in Pune, India; Sao Paulo, Brazil; Macau, China; and sub-Saharan Africa -- and two traits they all seem to share are resilience and ingenuity in keeping the lights on, the Internet up and employees productive under less-than-ideal conditions. As business becomes more global, their stories offer lessons that IT leaders in developed countries can learn from.
'A Completely Different Ballgame'
Business practices that are common in countries with established economies and stable governments can be "a completely different ballgame" in developing regions of the world, says German Valencia, CIO of shared services at DHL, a Bonn, Germany-based logistics company whose 500,000 employees do business in almost every country.
"We cannot assume everything is the same everywhere," Valencia says, citing varying costs of technology, connectivity issues, the skill sets of the local populace and aging equipment as just some of the challenges. Telecommunications may be "unreliable, outdated or even government-controlled," he warns. "Something as simple as Internet access can be exponentially more expensive than what you'd pay in the U.S., Europe or Asia."
"When you're in the U.S., you assume abundance. The mindset shifts completely in a developing country," says Niraj Jetly, CIO of Edenred USA, who previously served as CEO of a healthcare startup with offshore operations in Delhi, India. "You have a mentality of scarcity. You think about how you can be frugal while still meeting business needs."
Venkat A. Krishnan discovered that when he was CTO at Indian automaker Mahindra & Mahindra and his CEO charged him with building a factory from the ground up in Chakan, India. A former agricultural hub, Chakan is about 20 miles from Pune, the nearest city. There, "from the ground up" means something a little different from what it does in the U.S. or Europe.
In 2008, Mahindra committed to building an automobile factory in Chakan that would be part of a manufacturing hub that the government hoped would someday rival Detroit (GM, Mercedes-Benz and Volkswagen are among 10 manufacturers with facilities there now). But at the time, the site not only had no factory, it was also what's known as a "greenfield" -- it had no roads, water or electricity, explains Krishnan.
Krishnan first brought in what we in the U.S. call modular computer systems and what are known in India as trolley containers: 20-foot trailers powered by generators that each contained a network rack with 24U Hewlett-Packard ProLiant servers running everything from file-and-print services and databases for attendance tracking to project management tools and Cisco VoIP services for telephony and videoconferencing. That got the project started.
Next came contingency planning, with connectivity being the highest priority. "There was a lot of simultaneous development activity. The bulldozers would routinely cut through the fiber, and getting it back up again took four to eight hours," says Krishnan. His solution: "We set up a hybrid system that combined wired and wireless." When the wires were cut, the wireless was there for backup.
But that wasn't the only contingency plan Krishnan needed. "We focused on building high availability into every layer of the plant," he says. "We have 100% redundancy on everything -- servers, storage, databases, applications." Why? When you're in "the middle of nowhere," it's hard to get replacements -- for hardware or staff -- in a timely fashion. "Building in redundancy protects you from the tyranny of distance," he adds.
Labor and Laws
Finding and retaining employees, which is a challenge in developed countries, is especially tricky in emerging markets, CIOs say. The astonishing growth in some areas only aggravates the issue. "The vast majority of companies in India and [other parts of] Asia are driven by one characteristic: growth," says Ralf Dreischmeier, global leader of the IT practice at Boston Consulting Group. "I've seen banks in India growing revenues by 30%. Telcos might grow even faster." That makes it hard for companies to keep employees, especially when they're enticed by large, established companies like Infosys and Wipro.
As is the case in developed countries, organizations in emerging markets that can't pay as much as bigger operations must try to attract employees with other enticements. For example, Dreischmeier says that Boston Consulting advises companies in that situation to offer training programs. In many countries, he notes, "it's easier to get government funding for a training program than it is setting up a business. That's a key lever to get the right talent on board."
In particularly remote regions, it's especially important to find skilled people. "Our on-site IT staff has to be multiskilled," says Mark Reilley, director of IT at the Washington-based Elizabeth Glaser Pediatric AIDS Foundation, which has medical facilities scattered across sub-Saharan Africa. "The team here in Washington uses remote tools to log in to a desktop to tweak settings, and we visit on a fairly regular basis, but the IT technician there has to be able to deal with desktop, server and connectivity issues."
To offload work from those key employees and make the entire team more productive, Reilley has set up internship programs in Zimbabwe, Kenya and Mozambique (with more planned in Tanzania and Ivory Coast) to bring in college students majoring in IT-related subjects to help the on-site staff. "They may not have a full IT skill set, but they can set up printers to free up the dedicated IT person to focus on higher-level issues such as business continuity," says Reilley.
Sometimes employers' labor practices run afoul of, or at least get bogged down by, local labor laws. Over the past 20 years, Roger Seshadri, CIO at gaming and entertainment company Melco Crown Entertainment, a $4 billion developer of casinos and hotels, has opened properties everywhere from Peru and Curacao to a riverboat on the Ohio River in Indiana. He's currently working on a resort in Macau.
Because Macau is so small and its IT talent pool even smaller, he had to bring in IT professionals from 12 countries, including Australia, Malaysia and the Philippines, to get the right expertise for his team of 150, Seshadri says. But that involved getting work permits, and "vendors need a local company to act as their partner," he explains.
Work permits are easier to get in nearby Hong Kong, where Melco Crown has a corporate office. But because the two cities are still separate "special administrative regions" as defined by China, Seshadri can't move his 25 Hong Kong-based IT employees to Macau. His workaround: "We bring them over by ferry for meetings and then they go back. But even then they still have to go through immigration, which has long lines. It's only a one-hour ferry ride, but it can take them three hours to get here. It is not that easy to deal with, but we manage."
Sometimes laws relate not to people, but to technology. Gustavo Roxo, a Booz & Co. partner for IT and operations in Sao Paulo, cites taxes as an issue there and elsewhere in South America. In a developed country, he says, hardware and telecommunications usually represent 40% of the total cost of a project. In Brazil, they account for 80% of the total.
That's because, thanks to taxes, a server costs twice as much in Brazil as it does in the U.S. "After companies invest in hardware, they have less to invest in getting innovation through new software. It's an innate challenge here," he says. CIOs need to be aware of tax laws, if only to explain to counterparts in other countries why costs are so much higher. Fluctuating exchange rates and inflation wreak havoc with budgets as well.
How to Make IT Work From Anywhere
Simplify. "It's tempting to try new stuff," says Reilley, "but you have to think about who's going to support it. Define and enforce standards, and then choose your policy exceptions carefully." For instance, the Pediatric AIDS Foundation has standardized on Windows PCs and doesn't use Macs, not because Macs are harder to support, but because it's simpler to support just one platform.
A policy of keeping things simple works with staffing, too. "My experience in India taught me to think in terms of living with scarcity but still delivering results," says Jetly. "I'm always thinking about how I can do the same thing with fewer resources. If I think I need a team of 10 people for an optimal solution, can I deliver something that might be less perfect with fewer people?"
Mitigate. Think about what can go wrong and plan for it. That outlook could take into account anything from floods and civil unrest to customs regulations. "When you're venturing into unknown territory, you have to mitigate risk," says Seshadri. That's why system redundancy comes up so many times in conversations with emerging-market CIOs. Reilley, for example, issues satellite phones in Africa as a backup in case the network goes down.
IT leaders likewise agreed that another simple way to mitigate infrastructure risk is to build browser-based systems that let employees work offline while inputting data into an application and then uploading it when a connection is available.
Collaborate. If you need help, ask for it. Increasingly, CIOs in emerging markets are working with local vendors and outsourcers to fill gaps in their teams. That means relying on third parties to bring in staff resources when the CIO's company might not be able to. A benefit of using third-party personnel is that they can help you deal with cultural issues.
At the same time, if you're a global CIO, you must work with on-site staffers. "Learn to bridge cultures, time zones and distance," says DHL's Valencia. "Team engagement is essential, because our local IT teams know what's best in their environment."
All this may make life as a CIO in an emerging economy sound difficult, but the fact is that there are innumerable silver linings.
For example, Booz & Co.'s Roxo says that one of the byproducts of technology being so expensive in Brazil is that business and IT work more closely together because they can't afford mistakes or delays.
And in Africa, wireless communication is actually more prevalent than wired. Reilley says that gives his colleagues more flexibility to work wherever and whenever they need to.
And handling a greenfield project in a country like India means you have no legacy issues to deal with and are able to leapfrog technology cycles and derive a competitive advantage from the outset.
In general, starting with a blank slate lets IT leaders be more innovative. Mahindra's Krishnan was able to deploy from the start a dashboard that lets the IT team monitor every device in the factory, from the servers to the controllers. The factory itself, to increase sustainability and reduce dependence on other power sources, uses solar, wind and other renewable energy sources.
And then there's the personal payoff. Says Krishnan: "Every challenge is an opportunity. Faced with building a factory in Chakan, I believed that my staff could do it and I could lead it. And now we're up and running."
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