Sunday, July 17, 2005

Going Global Can Create New Challenges for Existing IT Staffs

When a business decides to expand its operations outside the U.S. borders, it takes on a whole new complexity. I believe this has been an assumption of business managers for quite some time, and it is definitely true. But in the information technology field, I am not sure that people are focusing on all the new issues that will confront them.

In the simplest of scenarios, an office setup to provide a local presence in a foreign country will require the support staff to completely rethink their processes and delve into areas that they have been able to ignore in the past. Simple desktop or notebook computers now beg the question of language, character sets, fonts, keyboard layouts, date and time formats, time zones, dictionaries, and most updates and patches are first released in English. That homogenous environment that the company once had is now gone. These remote systems cannot be managed using the same practices and processes that are used for a strictly U.S. operation. Are your staff members ready for those challenges?

How will these foreign systems, with different configurations and character sets interact with those systems in the U.S. If everything is written to standard APIs and data interchange standards, things should generally be alright. But how many times do you think shortcuts were taken to meet deadlines or cost constraints? Or perhaps you have a new developer who has not quite bought in to the process because it seems so much more work than just sitting down and coding it? It would be prudent to allocate testing time to ensure that there are no surprises when deployed to the off shore users. Date formats alone could create all kinds of problems with accounting and personnel systems if not handled properly. For example, there's a big difference between expressing June 12, 2005 as 6/12/2005 and 12/06/2005.

Then, there is the topic of localization of custom developed software. One cannot always assume that foreign staff will be able to operate in an all-English environment. How will your developers or contractors handle such issues and will they be able to do is successfully? And lets not forget that this will increase both the time and cost from development to deployment of such systems. Are these issues factored into their budgets and timelines?

And we cannot forget the simple issue of time and distance. Foreign offices will be covering different hours so technical support needs to be available to them during their office hours. Staff will also need to be in the habit of allowing sufficient time for delivery of packages as overnight shipping is frequently not an option, or not a cost efficient option at any rate, for many locations. Even some large cities may still take express carriers several days to make deliveries.

Telecommunications can also be a whole new area to deal with in many parts of the world. The billing schedules are quite different, with base charges and per minute charges that can vary significantly depending on when and where the call is made. Internet service options can be even more complicated, with a mix of transmission facilities being available; satellite, wireless up to 4Gb, leased line, and cable. Then there is the bandwidth issue and whether your line is dedicated or shared. Don’t assume anything about the configuration.

VAT, or value added tax, is roughly the equivalent of sales tax and can be found in nearly every other country outside of North America and the rates can be as high as 40% on some types of items or services. It is quite common for the VAT to be different depending on what is being purchased. Considering the costs, it is worth investing in buying some time from a consultant or specialist to determine if, as a foreign company, you can be refunded the VAT and under what conditions. Even if you cannot get the VAT fees back for office purchases, there is a good chance that VAT paid by staff that you send to the office can be refunded. There are companies that will handle these refund processes for you in exchange for a percentage of the refund.

These are but some of the challenges that you may face. Now, how do you actually address them? A short list of pointers should help.
  1. Identify and establish a relationship with local vendors.
  2. Research other companies that are working in the same area. Its likely that they’ll be willing to share their experiences with you.
  3. In the beginning, use one of your own staff to establish the office and its systems.
  4. Review your training materials.
  5. Ensure that your accounting staff can handle quick payments in the local currency.
  6. Have someone research local banking customs. It is not unusual to have banks take a fee from the recipient of a wire transfer and that needs to be calculated into your payment amount.
  7. Find the best source of the exchange rate for the local currency. Not all banks use the same sources.
  8. Be sure to inquire with your suppliers about discounts and/or surcharges based on which currency is used. Its possible that payment in US dollars will receive a discount in some parts of the world.
  9. Meet with your sales representative from the shipping company you use most. These companies, like UPS and Federal Express, can often cut the effort involved in sending equipment abroad. Investigate other companies and UPS and FedEx are not always the best options in foreign lands.
Before you get too far down the road, you need to ask yourself "Are we ready?”

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