Switzerland: Nestle's information technology strategy

Headquartered in Vevey, Switzerland, Nestle is a multinational company with food and pharmaceutical sales of $40 billion, 300 operating companies, 80 separate IS organizations, and 220,000 employees worldwide. The company's three official languages are English, French, and Spanish. Despite the challenges of the company's huge size and decentralized operations, its central IS group is trying to attain the benefits of standardization in those areas that can be standardized without imposing unnecessarily on local business operations.

In the past various units in the company have used a wide range of type of proprietary and open systems from different vendors. In the early 1990s it decided to move toward a set of standards that support a distributed client-server system. The standards include UNIX systems from IBM, Digital and HP, Oracle's Version 7 relational DBMS, the German firm SAP's integrated material, distribution, and accounting applications, Powersoft's PowerBuilder application development system, and Ernst & Young's Navigator CASE product. At one point headquarters tried to suggest a single PC vendors but the outcry from the business units was so great that there is now a list of recommended PCs.

Although the central IS staff is able to block the budget of any local IS organization that does not conform to standards, it generally pushes responsibility to the local groups because Vevey is simply too far from the rest of the world to know what is right in all situations. Instead, Vevey recommends standards and supports the development of core applications that can be used across multiple business units even if they need some customization for individual units. This approach mirrors efforts throughout the company to improve margins by generating improvements in logistics and operations and then adapting those improvements to other parts of the business.

Questions:

1. Use the WCA framework to organize your understanding of this case and to identify important topics that are not mentioned.

2. What issues (if any) make this case interesting from an international or intercultural viewpoint?

3. What difference would it make to Nestle if its centralized IS group were disbanded?

Source: Greenbaum, Joshua. "Nestle's Global Mix," Information Week, Apr. 25, 1994, pp. 44-46.

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