Collaboration across borders

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Collaboration across borders

An AT&T survey and white paper in co-operation with the Economist Intelligence Unit

Strength through partnership

As companies pursue global expansion strategies, collaboration—

the establishment of partnerships with other organisations in pursuit of a common business goal—is increasingly viewed as an attractive alternative, or complement, to direct investment in overseas markets. The EIU/AT&T survey shows that the overwhelming majority of firms worldwide expect the number of collaborative relationships with third parties overseas to grow over the next two years. These relationships involve cooperation beyond the simple exchange of goods, services and money. Nearly three-quarters expect this growth, and in Asia-Pacific one in five firms believes the number of partnerships will increase “greatly”.

The variety of collaborative relationships being established is also expanding. Today they may include R&D partnerships with niche specialists, cross-border design engineering, international sales and marketing alliances, and even customer-supplier teamwork, where customer input is gathered and used to enhance products and services. For some companies, partnerships have grown into an entire ecosystem of associates. Today’s forms of collaboration “essentially make the partner an extension of your firm,” according to Lloyd Salvage, vice president for global segment marketing at AT&T. “The level of interaction that occurs between the partner and the firm,” he maintains, “is increasing dramatically.”

Executive Summary

Companies are increasingly looking to pursue cross-border partnerships to augment their global expansion strategies. Large and midsize firms alike are scouring the world for partners to bring greater economies, talent and efficiency to their operations.

Almost 75% of firms in a worldwide survey of 497 senior executives conducted by the Economist Intelligence Unit for AT&T plan to increase the number of collaborative relationships they hold with third parties overseas.

Making such relationships work will require the support of new collaborative technologies. The survey shows that firms are deploying an entire range of tools to communicate with overseas partners, rating web conferencing and videoconferencing as most useful for helping collaborative relationships succeed in this age of virtualization. They are also experimenting with an array of other technologies—including mobile IP applications and social networking tools—in order to forge better links with their partners.

Businesses have only scratched the surface of the flexibility and resourcefulness that IP networks can bring to global

partnerships. IP’s main role in supporting collaboration, according to survey respondents, will be to enable the secure sharing of information between partners. More specifically, they look to IP networks to foster collaborative online work on project

documents by dispersed teams. Making applications available to remote workers involved in collaborative engagements is also considered an important role for IP.

Fundamental to making collaboration work are people skills—the human factor. Almost half, or 47%, of survey respondents agree that the skills of personnel assigned to a partnership is vital to its success. Employees managing alliances need to be versatile and mindful of factors beyond the immediate project objectives. They not only need to keep a firm eye on the safety of the company’s intellectual property, but also to gauge when the team needs to meet face to face, whether tools are being used effectively and whether cultural misunderstanding is dogging progress.

The benefits of collaborative partnerships also bring risks, chief among them being the potential loss of intellectual property.

Secure networks will help reduce such risks, but most critical will be managers’ prudent control of information, and of partners’

access to it, in collaborative engagements.

Written in co-operation with the Economist Intellgence Unit

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Even in industries long reliant on partnerships, alliances with other parties are on the increase. “We’re collaborating more than ever now,”

says Frank Leistner, chief knowledge officer at SAS, a US-based business intelligence software provider. Hardly surprising then, that

support for more collaboration with external partners, not to mention suppliers, emerges as one of the main drivers for network investment in companies over the next two years.

How do you expect the number of collaborative relationships that your company maintains with third parties overseas will change over the next two years?

1. Increase greatly 12.6 % 4.7 % 6.9 % 19.4 %

2. Increase 61.7 % 71.3 % 58.8 % 58.1 %

3. Stay the same 20.4 % 19.4 % 28.4 % 19.4 %

4. Decrease 1.0 % 0.8 % 1.0 % 0.6 %

5. Decrease greatly 0.0 % 0.0 % 0.0 % 0.0 % 6. Don’t know/ Not applicable 4.3 % 3.9 % 4.9 % 2.6 % North Asia Global Europe America Pacific

Source: Economist Intelligence Unit / AT&T survey, June 2007

0 20 40 60 80 100

North Asia

Global Europe America Pacific

1Gartner, Forecast: Web Conferencing and Team Collaboration Software, Worldwide, 2006-2011, June 2007

Executives are taking collaboration technology seriously. The IT research group Gartner is expecting the global market for web conferencing and team collaboration software to reach $2.8 billion by 2010—more than double its size in 2006¹.

“Collaboration tools are evolving, and globalization is a key motive,” says Franco Ongaro, head of the European Space Agency’s Advanced Concepts and Technology Planning department (see blue box on page 5).

Choose your tools

From wikis to video on PDAs, the range of collaboration tools at partners’ disposal is expanding. David Coleman, managing director of San Francisco-based consultancy Collaborative Strategies, sees an encouraging trend taking shape: the tools are adapting to people’s behavior, and not the other way round as had previously been the norm. With videoconferencing on mobile devices, for instance, people on the move do not have to trek back to a special videoconference room. “Collaboration tools are getting more and more multimedia,” Coleman says. He also finds that end-users are customizing their collaboration tools.

The survey shows that executives view web conferencing as the most promising of multiple technologies that will help collaborative

relationships succeed, cited by 40%. Worldwide, this is followed by videoconferencing. Voice over IP also figures prominently, and more than a quarter of respondents believe IP virtual private networks (VPNs) will be crucial in supporting partnerships.

What are likely to be the main drivers of network investment in your company over the next two years?

(Top responses)

1. Supporting expansion in global markets 28.3 % 2. Improving customer service and customer relationships 26.3 % 3. Supporting greater collaboration with external partners

(excluding suppliers) 23.0 %

4. Improving supply-chain efficiency 19.8 % 5. Supporting the expansion of remote working by employees 19.8 %

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1 2 3 4 5

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The simpler the tools are to use, the better, Coleman believes. “It’s better to have two functions that are easy to use than 18 which aren’t.” The trouble, he says, is that developers of collaboration software generally go for the latter. Users, on the other hand, are more likely to use a web conferencing tool, for example, if all they have to do is tap in a simple four-digit code to allow them to see each others’ screens.

The real breakthrough will come with integrated collaboration tools, says AT&T’s Salvage. “We believe there is a critical need for clients to have collaboration tools that span technologies—wireline, wireless WAN and a range of devices, whether PCs, PDAs, or cell phones. A technology-agnostic set of tools is required." Salvage expects that true integrated collaboration tools will begin to appear in 2008, with broad adoption likely in 2009.

IP in the relationship

IP is integral to the technologies that executives believe will be most useful in helping collaborative relationships to succeed. And in

most cases, IP is already the foundation for electronic collaboration with overseas partners.

Executives’ views on where IP will be most critical vary, however.

Almost 36% are convinced that its value will lie in "enabling the automated and secure sharing of information between partners". A similar number believe more specifically that IP will foster

collaborative online work on project documents by dispersed teams.

For example, several companies’ legal departments could be working on contracts in parallel and approving a deal in a fraction of the time it used to take—and as a result bringing a product or service to market faster than competitors.

More than a quarter of surveyed executives think that IP’s most critical role will be to provide access to applications to remote workers and locations involved in partnerships. A further 26% see its core function in allowing virtual meetings between dispersed project teams from both parties. Many also see IP playing a key role in supporting faster decision-making by executives responsible for the engagement.

Which of the following technologies do you think will be most useful in helping collaborative relationships to succeed?

(Top responses)

1. Web conferencing 39.5 %

2. Videoconferencing 32.1 %

3. Voice over IP 28.7 %

4. IP virtual private networks (VPNs) 26.1 % 5. Wireless and mobility applications 24.2 %

6. Instant messaging 14.0 %

7. Collaborative product design software 12.2 % 8. Don’t know/ Not applicable 3.4 %

9. Other, please specify 1.6 %

0 10 20 30 40

1 2 3 4 5 6 7 8 9

In which of the following aspects of implementing collaborative relationships with overseas partners will IP networks be most critical? (Top responses)

1. Enabling the automated and secure sharing 35.7 % of information between partners

2. Enabling collaborative online work on project 33.5 % documents by dispersed teams

3. Enabling virtual meetings between dispersed 26.3 % project teams from both partners

4. Providing access to applications to remote 25.5 % workers and locations involved in the

collaborative engagement

5. Enabling faster decision-making by executives 23.0 % responsible for the collaborative engagement

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1 2 3 4 5

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Keeping the relationship on track

As ever, technology will only work if employees' skills in using it are raised to the right level. Executives realize this. As important as technology is to supporting collaboration, business leaders agree that the skills of personnel assigned to a collaborative engagement are the most critical factor for making it work. As Coleman puts it, “If people aren’t good at communicating face-to-face, the tools will just make it worse”. Training may be required, especially if dealing with people from different cultures.

Companies must in fact arm themselves with the skills to handle a new type of interaction, especially when partners are being engaged in emerging markets such as India. “Companies who embrace collaboration with Indian partners can advantage

themselves in their markets,” says AT&T’s Salvage. “The Indian model will evolve over time beyond labor cost arbitrage, to become a competitive source of knowledge workers that will help differentiate the company.”

The European Space Agency’s teamwork mission

Based in Paris, the European Space Agency (ESA) relies on multinational collaboration to carry out its core job of drawing up the European space program and carrying it through. Seventeen European member states contribute, and teamwork extends across continents. On a typical project, between 15 and 20 engineers in different countries are involved, according to Franco Ongaro, head of the agency’s Advanced Concepts and Technology Planning department. This number can expand to 50, especially if industrial partners are pulled in.

The agency’s Concurrent Design Facility is the chief collaborative tool that brings partners together, connecting to them via IP. “The ESA has created an environment allowing all technical specialists to work together on the same mission,” says Ongaro. “A single modification can be seen by everyone.” The collaborative tool’s capacity for getting the team’s output right at the earliest stages is one of the main benefits, Ongaro says. “Relatively early in the design we can bring in scientists, show them the analysis and fine-tune requirements,” he says. A process which previously took months now takes weeks, he adds.

Moreover, simulation tools can be added to review, for example, if a spacecraft can land successfully on Mars as well as what tasks it can perform once there.

Two crucial factors for making collaboration run smoothly at the agency are standard tools for exchanging data and

streamlined training, Ongaro says. “If project managers are given a certain number of man-hours per project, they don’t want to spend half of that on training.” They need to be convinced that two days of staff training will save four weeks of work.

Ongaro says that electronic collaboration at the agency not only involves “creating something new” but also “informing the wider community”. For the latter aspect, podcasts and virtual visits on the Web are now “of fundamental

importance—scientists and students get a much more realistic experience,” he says. A 30-minute talk by the chief scientist explaining a mission “reaches thousands”.

While already bringing substantial benefits, Ongaro believes that collaboration tools at the ESA and elsewhere must evolve to unleash their potential. “So far, they’ve been adapted too much to paper processes,” he believes.

“They need to apply all the capability of the computer to actual technical work processes. It can be likened to present-day shopping on the web compared with using a catalog and an order form.” For instance, engineers and scientists need to be able to "walk through" a spacecraft together using avatars—electronic representations of people found in virtual worlds such as ‘Second Life’.

Likewise, videoconferencing needs to become “more convivial”, for example, by showing a recipient picking up a sheet of paper handed to them on-screen. None of this is as futuristic as it sounds, maintains Ongaro.

Which factors are the most critical for managing a successful collaborative relationship? (Top responses)

1. The skills of personnel assigned

to the relationship 47.3 % 48.8 % 50.5 % 39.5 % 2. Backing of the board/

senior management 26.5 % 32.6 % 20.4 % 25.5 % 3. A proper structuring of incentives

for each company 25.1 % 21.7 % 24.3 % 31.8 % 4. A fair sharing of risk 23.4 % 28.7 % 23.3 % 22.9 % 5. Open and reliable information-

sharing mechanisms 23.2 % 24.0 % 16.5 % 28.7%

North Asia Global Europe America Pacific

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1 2 3 4 5

Beyond personnel skills, executives also attach substantial weight to securing the backing of the board or senior management, a fair sharing of risk between parties, and a proper structuring of incentives for each company, a factor valued most highly in Asia-Pacific. The latter point is not easy to resolve. “One of the bigger challenges is how to compensate people when there’s full collaborative research,” says the European Space Agency’s Ongaro. “If solved, this could usher in a new era of collaborative open-source design.”

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also crucial, and technology has a clear role to play here. According to Leistner of SAS, when communicating across borders, it helps if good information-sharing already exists within the organization.

“We’ve had a workgroup culture from the start. There’s no big barrier in contacting anybody,” he says.

SAS has been able to build considerably on this, with an extranet for collaborating with partners, online forums and external blogs. It also actively solicits user input for the software development process. A focus for collaboration with customers is the SAS “Ballot” which the company describes as “an ongoing communications vehicle that gives users opportunities to help fine-tune SAS’ software tools”.

Suggestions are gathered and considered for inclusion in the next software release. According to SAS, since its inception, more than 85% of Ballot input has been implemented by its R&D division.

This is one important method of involving the consumer in the production cycle, but as Leistner says, “Every customer contact is a way of getting feedback.” It takes considerable management and technical effort, and persistence, for companies to fully achieve this and garner valuable customer input for different departments.

For managing mainstream collaborative projects, Coleman maintains, fundamental human issues must not be ignored. “It is

team needs to come together every six months, or things tend to fall apart.” Trust needs to be maintained. It happens frequently that team members stop posting critical data if there has not been a recent physical meeting; conversely high levels of data are posted immediately after. “It makes a difference to what they’re prepared to share,” Coleman observes.

Managing the risks

Because company information has to be shared in collaborative ventures, safeguarding the relationship is vital so that sensitive material does not get into the wrong hands. Executives have to think through issues such as what happens to the information once the project ends.

Executives’ views vary as to what the biggest potential hazards are in entering collaborative relationships. More than one-third of those surveyed see the loss of intellectual property as the main risk, especially when there are varying level of enforcement of intellectual property laws in different countries. Other executives (30%) are extremely wary of reliance on partner firms in areas which are core to their company’s success—implying in this case that their chief concern is the overall stability of their partners, rather than their integrity.

Which of the following are the greatest risks of entering into collaborative relationships? (Top responses)

1. Loss of intellectual property 33.5 % 2. Undue reliance on other firms in areas which are core

to the company’s success 29.5 %

3. Reputational risk arising from association with

another company 24.4 %

4. Distraction of key personnel from focus on core

corporate activity 23.6 %

5. Leaking of sensitive information on corporate strategy 19.6 %

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1 2 3 4 5

Reputational risk arising from association with another company concerns about a quarter of executives. They may be dragged down, for example, by a partner unaware of variations in local laws. A partner may be carrying out a marketing campaign in a foreign country and unwittingly violating consumer data protection laws.

A further 20% of respondents are wary of another type of risk: the leakage of sensitive information on corporate strategy. SAS’s Leistner says that a sound precaution for protecting company information in collaborative ventures has been to allot partners different levels of access to the corporate VPN via their individual “profiles”. “Some partners are competitors,” he says. “They always want to know more.”

Conclusion

Collaboration is increasingly seen in the executive suite as a central vehicle of global growth strategy, and no longer simply in opportunistic terms. Many companies are eagerly seeking new ways of cooperating with partners, and are investing in the human and technological resources necessary to make collaborative partnerships thrive.

Managing alliances with firms in different geographies without doubt adds enormous technical and managerial complexity to collaboration.

Diverse regulatory regimes and foreign infrastructures must be dealt with, not to mention unfamiliar cultures.

Advanced technologies, tools and management techniques are coming available to help firms manage this higher level of collaboration. Two intangible factors to make such collaboration work, however, are as old as commerce itself: imagination and strong personal trust between partners.

This is the second in the Globalization and networking series of thought-leadership papers written by AT&T in co-operation with the Economist Intelligence Unit. Future papers in the series will explore how companies are approaching the challenges of managing the global supply chain, and how they are addressing the risks surrounding globalization.

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Appendix

The following findings are drawn from a survey of 497 executives in a range of industries across the world. The survey was conducted in June 2007, and we are grateful for the time and insights of everyone who participated.

What are likely to be the main drivers of network investment in your company over the next two years?

Select up to two.

1. Supporting expansion in global markets 28.3 % 2. Improving customer service and customer relationships 26.3 % 3. Supporting greater collaboration with external partners

(excluding suppliers) 23.0 %

4. Improving supply-chain efficiency 19.8 % 5. Supporting the expansion of remote working by employees 19.8 % 6. Supporting business continuity planning,

eg. network back-up, redundancies 18.4 % 7. Improving network defenses against attacks and data theft 16.6 % 8. Convergence—migration of network and applications to IP 12.6 % 9. Increased M&A, and the need to integrate networks 12.2 % 10. Implementation of enterprise wireless capabilities 10.0 %

11. Don’t know/Not applicable 1.8 %

12. Other 1.2 %

0 5 10 15 20 25 30

1 2 3 4 5 6 7 8 9 10 11 12

How do you expect the number of collaborative relationships (co-operation going beyond the simple exchange of goods, services and money) that your company maintains with third parties overseas will change over the next two years?

Increase greatly Increase Stay the same Decrease Decrease greatly

Don’t know/ Not applicable

12.6%

61.7%

20.4%

1.0%

4.3 %

Which factors are the most critical for managing a successful collaborative relationship? Select up to two.

1. The skills of personnel assigned to the relationship 47.3 % 2. Backing of the board/ senior management 26.5 % 3. A proper structuring of incentives for each company 25.1 %

4. A fair sharing of risk 23.4 %

5. Open and reliable information-sharing mechanisms 23.2 % 6. Specific and detailed contracts 14.8 % 7. The quality of underlying networks and IT systems 10.6 % 8. Rough equality of power within the relationship 7.4 % 9. Appropriate dispute resolution mechanism 6.4 %

11. Don’t know/ Not applicable 1.8 %

0 10 20 30 40 50

1 2 3 4 5 6 7 8 9 10 11

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Which of the following are the greatest risks of entering into collaborative relationships? Select up to two.

1. Loss of intellectual property 33.5 %

2. Undue reliance on other firms in areas which are core to the

company’s success 29.5 %

3. Reputational risk arising from association with another company 24.4 % 4. Distraction of key personnel from focus on core corporate activity 23.6 % 5. Leaking of sensitive information on corporate strategy 19.6 % 6. Increased exposure to regulatory or legal risk when

collaborating with firms in different jurisdictions 17.4 % 7. Leaking of sensitive information on customers or staff 14.4 % 8. Weakening of customer relationships 12.8 %

0 5 10 15 20 25 30 35

1 2 3 4 5 6 7 8 9 10

In which of the following aspects of implementing collaborative relationships with overseas partners will IP networks be most critical? Select up to two.

1. Enabling the automated and secure sharing of information

between partners 35.7 %

2. Enabling collaborative online work on project documents

by dispersed teams 33.5 %

3. Enabling virtual meetings between dispersed project teams

from both partners 26.3 %

4. Providing access to applications to remote workers and

locations involved in the collaborative engagement 25.5 % 5. Enabling faster decision-making by executives responsible

for the collaborative engagement 23.0 %

6. Enabling virtual meetings with large groups for training/

information sharing 13.0 %

7. Supporting mobile workers involved in the collaborative

engagement 11.8 %

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1 2 3 4 5 6 7 8 9

Which of the following technologies do you think will be most useful in helping collaborative relationships to succeed?

Select up to two.

1. Web conferencing 39.5 %

2. Videoconferencing 32.1 %

3. Voice over IP 28.7 %

4. IP virtual private networks (VPNs) 26.1 % 5. Wireless and mobility applications 24.2 %

6. Instant messaging 14.0 %

7. Collaborative product design software 12.2 % 8. Don’t know/ Not applicable 3.4 %

0 10 20 30 40

1 2 3 4 5 6 7 8 9

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In which region are you personally based?

Asia-Pacific Western Europe North America Latin America Eastern Europe Middle East and Africa

31.8%

23.3%

20.9%

18.6%

2.8%

2.6%

What is your title?

CEO/ President/ Managing director Manager

SVP/ VP/ Director Head of Department Other C-level executive Other

CFO/ Treasurer/ Comptroller Head of Business Unit Board member

CIO/ Technology director

25.2%

11.1%

15.1%

8.9% 8.5%

6.0%

5.6%

5.4%

6.4%

7.8%

What is your organisation's global annual revenue in US dollars?

$500m or less

$500m to $1bn

$1bn to $5bn

$5bn to $10bn

$10bn or more

46.8%

12.7% 15.7%

7.4%

17.4%

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What are your main functional roles? Please choose no more than three functions.

1. Strategy and business development 40.7 %

2. General management 38.7 %

3. Finance 23.4 %

4. Marketing and sales 20.4 %

5. IT 11.6 %

6. Operations and production 11.2 %

7. Customer service 8.8 %

8. R&D 8.6 %

9. Information and research 8.4 %

10. Risk 8.4 %

11. Human resources 6.0 %

12. Supply-chain management 4.6 %

13. Legal 4.2 %

14. Procurement 3.4 %

15. Other 4.0 %

0 5 10 15 20 25 30 35 40 45

1 2 3 4 5 6 7 8 9 10 11 12

Professional services 15.7 % Financial services 14.5 % Healthcare, pharmaceuticals and

biotechnology 10.4 %

IT 7.7 %

Manufacturing 6.9 %

Government/Public sector 6.7 % Energy and natural resources 6.1 % Consumer goods and retailing 5.5 % Entertainment, media and publishing 4.7 %

Automotive 3.7 %

Chemicals 3.1 %

Construction and real estate 2.6 %

Telecoms services 2.2 %

Logistics and distribution 1.8 % Transportation, travel and tourism 1.8 %

Aerospace/defense 1.4 %

Electronic components manufacturing 1.4 %

Software 1.4 %

Telecoms equipment 1.2 %

Computer hardware 1.0 %

What is your primary industry?

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For more information contact an AT&T Representative or visit www.att.com/emea