As Companies Aggressively Pursue Globalisation, Most are Still 'Flying Blind'

While many large companies are aggressively pursuing globalisation of their products and brands, the large majority are flying blind, without the ability to truly see what is happening globally or make adjustments, according to new research from The Hackett Group, Inc.


Hackett's new "Global Operating Model" Book of Numbers research, which looks at the performance of more than 100 companies, found a strong acceleration of the trend towards globalisation of business, with most companies moving toward high levels of globalisation for their products and services lines and expanding the globalisation of delivery of business services over the next few years.


In large part these trends are being driven by historically high growth rates in China and other emerging markets combined with stagnation in developed markets.


But despite high levels of automation, most companies cannot quickly access much of the information required to truly understand their global performance.


In a recent study, Hackett found that less than half have near real-time visibility into customer information and business volumes, and even fewer have the same level of visibility into supplier spend, working capital, financial performance and forecasts, and risk.


The research details the need for companies to align the globalisation of their business services operations with those of their overall enterprise, in order to truly succeed at their globalisation efforts.


Globalisation of business services requires dramatic changes to improve visibility of management information, in part through expanded use of automation. But most companies lag far behind in this area.


"Globalisation is undoubtedly one of today's most important business trends," said The Hackett Group President of Advisory & Research Services Sean Kracklauer.


Kracklauer noted that companies understand that tapping into emerging markets is a key to success in the future. This is driving the need to focus outside of their domestic markets and truly globalise and standardise their product lines, brands, customer and supplier bases, and business processes.


To accomplish this, they require both visibility and control, so that they can understand their customer base, make the best pricing decisions, and make the right choices regarding a wide array of opportunities and risks.


"But it's pretty obvious that most companies simply don't have the 'global DNA' that they need to do this effectively," explains Kracklauer. "For example, companies understand the value of having one view of the customer. But most don't have the ability to quickly see and understand what they're doing across different parts of their organisations, given the highly manual methods in use to compile information from many different sources."



Timeliness of financial information

Timeliness of financial performance and forecasts information is an even greater challenge for most companies.


"Incredibly, although we have been talking for years on the need to move beyond stand-alone spreadsheets, they are still the primary forecasting tool in nearly three quarters of companies," says Kracklauer.


Kracklauer says that this continued reliance on spreadsheets and manual data sourcing are preventing companies from moving to more forward-looking analyses based on a wider variety of non-financial data sources.


"The challenge is only compounded as companies further globalise their operational footprint," says Kracklauer. "As a result, companies are missing opportunities, and are likely to get hit with problems that they could have anticipated and mitigated otherwise."


According to research, less than half of all typical companies have "near real-time" access to customer information. Only about a quarter of all typical companies have similar access to financial performance and forecasts.


Similarly, less than 30 percent have "near real-time" access to supplier base spend volumes. In all cases, globalisation leaders show dramatically greater levels of access to near real-time information, having access to all this information and more nearly 80 percent of the time, on average.


Automation is one key strategy companies use to achieve these results, with the research showing that globalisation leaders say they have "mostly or fully" automated key areas up to 50 percent more often than typical companies.


The research found that while globalisation leaders have already almost completely globalised their brands and products and service lines, typical companies have only done this about half the time, on average. But typical companies are hoping to increase globalisation in these areas by up to 30 percent over the next two to three years.


In areas such as supplier and customer bases, even leaders say they have achieved significant levels of globalisation only about half the time. But this is still about twice as often as typical companies.


Compared to typical companies, globalisation leaders also have much higher levels of standardisation across everything from marketing and R&D to customer support, manufacturing, and sales.

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