To achieve growth targets, many enterprises are moving into emerging markets
Emerging markets represent the next big growth opportunity for global enterprises. But while few CIOs are heavily involved in choosing which emerging market (if any) their enterprise expands into, almost all are expected to play a critical role in ensuring the venture's success once the decision has been made. And worse still, usually there's only a couple of months, not the years it normally requires, to have an operation up and running - in a language they don't understand, using local staff whose capabilities are untested. Welcome to the emerging market CIO club!
"Emerging market" was a term coined in 1981 by Antoine W van Agtmael of the World Bank to describe those places that weren't first world, but who weren't stagnating at low levels of income per head. He defined an emerging market as an economy with low-to-middle per capita income. In 1981, such countries constituted approximately 80 percent of the global population, yet represent just 20 percent of the world's economies.
The situation hasn't really changed much, with some surprising conclusions. For example, China, one of the two economic powerhouses of the early 21st century (along with India), and Tunisia, a tiny country with few resources, are both emerging markets because, through economic development and reform programs, they have begun to open up their markets and "emerge" onto the global scene. Emerging markets are attractive economies because many are fast-growing and packed to the gunwales with credulous, willing consumers.
Once the decision to enter an emerging market has been made, the marketing spiel has been put to one side. Now comes the serious business of building a business.
For the CIO, the best approach involves three phases. The investigate phase - one to three months - focuses on gathering information about business needs and the emerging market environment, to decide the best blend of standardized and customized IT for the emerging market.
The implement phase - three months to a year - focuses on using cultural and process levers to initially implement IT to fit the emerging market so that the enterprise can start operating its business there.
And the incorporate phase - three to six months - focuses on integrating the emerging market systems into the enterprise, gathering lessons learned to facilitate other emerging market implementations and adjusting the role of the emerging market as the enterprise and emerging markets mature.
Investigate phase: balance business needs and emerging market conditions. When you're investigating how to set up the IT part of a business in an emerging market, it's useful to consider that each emerging market has four country characteristics.
The first characteristic, technology, applies to the condition of the country's IT infrastructure. The power grid can often be unreliable; the country can have a low level of Internet penetration, and it may have immature telecomms providers and services. The advantages might be that global IT vendor products and support are available, and there is no legacy infrastructure to replace.
The second characteristic involves laws regarding IT workforce, language and data transfer. These laws may not protect data privacy and security, import and export of technology, intellectual property and capital. But the advantages could be that the existing labour laws often favour global corporations, allowing lower cost of market entry and exit.
The third characteristic concerns culture. The most obvious challenge is that language and communication styles vary greatly by country, as do IT usage behaviours. The advantages might be that hierarchical, top-down cultures often resist new technology less and show less attachment to old technologies.
The fourth and final characteristic involves the workforce. The challenges: dearth of skilled IT people who know both technology and the enterprise's official language. The advantages might be that the workforce comprises highly motivated, diligent and educated employees with entrepreneurial attitudes and a desire to gain new IT skills and participate in new opportunities.
By rating the importance of each of these challenges, CIOs can determine which global IT model - multi-local, parent-led, federated or centralized - is best suited for their individual emerging market environment.
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