China`s IT Challenge

By Allan Alter  |  Posted 01-10-2008

Nanjing, China's historic former capital, is home to 7 million people, 50 universities and colleges, 100 technical institutes and a large manufacturing sector. But Nanjing vice mayor Chen Gang told me, at CIO Insight China's Sino-American CIO Summit near Beijing recently, that the city needs "to change the model of [economic] development" so it can create jobs for graduates without producing more pollution.

Its solution is to support Nanjing's software and IT services industry. Nanjing also is embracing eGovernment. Nanjing residents (and foreign investors) can obtain information, apply for licenses and pay fees and fines online.

Nanjing illustrates China's policy of "informatization"-the official term for an ever-broadening application of IT in business and government and the buildup of its IT sector. China is investing in technical education and infrastructure; its American-educated tech services entrepreneurs have big ambitions.

Informatization also depends on the strength of China's IT organizations. In fact, the capabilities of its IT systems, the quality of its management, and information quality and security are important not just for China but to foreign joint ventures, partners and customers.

Today, those capabilities appear more uneven than those of their counterparts in U.S. IT organizations. Inexperience with enterprise applications, command-and-control management and reporting structures that bury the IT function within the company bureaucracy cause Chinese IT organizations to range widely in sophistication.

Many of the Chinese IT executives I met at the summit made a powerful impression. For example, Hou Weidong, CIO of one of China's largest commercial banks, the Bank of Communications, is in charge of new product and service development as well as IT, uses a battery of data analysis tools to minimize the risks of taking on bad debt, and has moved the bank's IT to an SOA (service-oriented architecture).

Li Xiangrong, the information office director of the State Grid Corp. of China, uses an ROI model that accounts for the department's IT sophistication. Chen Gang, the English-speaking general manager of the IT planning and development center for China Mobile Group in Shanxi province, spoke with me about the adjustments his company is making as it transforms from a utility to a company whose products are a vehicle for fashion and self-expression among young Chinese. His CEO is encouraging debate and new ways of thinking among his management team as part of that adjustment.

But not all IT executives are so progressive. One Chinese IT executive told me he doesn't understand why there's so much concern about IT security; it's enough to install anti-virus software and firewalls. He seemed unaware that IT security is a behavior-modification issue as much as a technological issue. Another Chinese IT executive seemed to define ROI as whatever it takes to keep the boss happy or convince him to raise the IT budget. (Of course, plenty of American IT executives view ROI in much the same way.)

Sometimes, companies invest in IT before they are ready: Wang Xiao Gang, general manager of the IT department of the YiLi Industrial Group, said its ERP system had remained dormant for several years before management knew what it wanted to do with it. (The system is now in use and a critical part of its YiLi's infrastructure and business plans.)

The enormous scale and special challenges of some Chinese enterprises also boggle the imagination: Zhu Hongling, general manager of the IT department of China Life Insurance Co., must service 100 million life insurance policies. And YiLi, China's largest producer of dairy products, is connecting dairy farmers in Inner Mongolia to a modern supply chain network.

Today's Chinese businesses are doing in a few years what took decades for western IT organizations: building large-scale IT organizations, infrastructures, architectures and portfolio of enterprise applications. Success has been inevitably uneven. In time, the average level of IT in China will improve.

For now, CIOs outside of China should not assume the IT practices of their Chinese partners are the same as theirs. Instead, CIOs they should seek to understand the IT strengths and weaknesses of their Chinese partners, and compensate for them.

ALLAN ALTER is the editorial research director of Ziff Davis Enterprise. Please send questions and comments to editors@cioinsight.com.