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Anshoo S. Patel

IT-Enabled Globalization at Wyeth

Companies with multiple divisions require strong business processes to successfully integrate their core functions.  To develop an effective architecture, organizations employ a business model that can be centralized, decentralized, or a hybrid of both.  In any of these, Information Technology (IT) is an important tool that can support and integrate the firm’s core functions.  These approaches, however, are fundamentally different from an IT-enabled system.  For instance, while IT is an important component in both systems for information sharing, efficiency and cost-effectiveness, in an IT-enabled system, the information technology role is strategically aligned with the organization’s mission and vision.  It is a critical element to the success of the organization.

During the late 1990s, Wyeth launched an IT-enabled globalization strategy in an effort to create a globally integrated pharmaceutical company.  To do so, Wyeth needed to “transform its business processes by changing underlying systems and practices.”[1] This was made possible by a shift in systems thinking.  It required transitioning IT from its previous low priority support function to an enabler of Wyeth’s globalization vision.  At Wyeth, a mere centralization of the processes and structure would not achieve globalization.  To truly become global, the firm needed a comprehensive strategy with information technology at the centerpiece.

Top management recognized the potential of IT as a key enabler of its globalization strategy, and empowered IT to provide the fundamental platform for Wyeth’s global business operations.  According to the resources, processes and values (RPV) theory, “organizations successfully tackle opportunities when they have the resources to succeed, when their processes facilitate what needs to get done, and when their values allow them to give adequate priority to that particular opportunity in the face of all other demands that compete for the company’s resources.”[2] To achieve this type of competitive advantage, Wyeth committed to correcting the handicaps of its existing system and enhancing the overall IT function. It developed “formal systems processes such as application development, maintenance as well as IT governance mechanisms, business to IT valuation strategies and prioritization approaches.”[3] The company also invested in the “creation of information management (IM) specialists from the business staff who are responsible for establishing and implementing business requirements and processes.”[4] This would shift focus from technical aspects of the system to IT management.  In addition, processes were standardized to facilitate interrelation, connectivity, and information sharing among the business units.  These enhancements to Wyeth’s resources andprocesses would help to fulfill the needs of a globally integrated firm.

Wyeth’s centralized globalization strategy allowed the company to streamline and enhance its core business functions to effectively deliver value-added products and services on a global scale.  Its success in the move towards globalization was a direct result of its IT-enabled strategy, which is fundamentally different from a centralization strategy.  In essence, information technology was a vital catalyst that transformed Wyeth into a global corporation.

[1] Mandviwalla, M., Palmer, J., The Globalization of Wyeth, (London, Ontario: Ivey Publishing, 2008), p. 6.

[2] Christensen, C.M., Anthony, S.D., Roth, E.A, Seeing What’s Next: Using the Theories of Innovation to Predict Industry Change (Boston: Harvard Business School Publishing, 2004), p. 6.

[3] Mandviwalla, M., Palmer, J., The Globalization of Wyeth, (London, Ontario: Ivey Publishing, 2008), p. 6.

[4] Ibid.

Amazon Web Services – Reshaping Technology Services

In launching Amazon Web Services (AWS), Amazon was a first-mover in providing a platform for “cloud” services,” and introduced a new value proposition that reshaped the traditional large storage market.  AWS provided reliable, scalable, inexpensive storage and or computing capabilities.  It also allowed companies to get to market faster than they otherwise would because they were not delayed by infrastructure development and implementation.  The significant benefit of AWS was that it is very easy to use and provided instant capacity.  In addition, usage of AWS considerably reduced costs for the client because it eliminated the upfront capital expenditures on servers and datacenters.  This savings in costs permitted companies to invest their capital on the features and personnel that differentiates their product or services rather than on their information system. These were all benefits that the traditional storage market could not provide.  Therefore, AWS was, in essence, a disruptive innovation for the traditional large storage industry.

The large storage market was highly competitive and dominated by several incumbents such as Network Appliance, Inc., EMC Corporation, IBM, HP, Sun and Dell Computer Corporation.  However, very few of these large corporations provided the type of pay-as-you-go online storage service provided by Amazon.  Developers were attracted to the pay-as-you-go pricing model because it provided customized flexibility without considerable costs.  This served as a significant competitive advantage for Amazon, as other companies providing substitutes for Amazon’s web-based services did not have as attractive pricing models as Amazon had developed. 

There was also significant value in Amazon’s ability to deliver its services well.  Amazon had invested heavily in developing the software required to run its traditional consumer business, and therefore had the unique skill set be a leader in providing web-based technology services to businesses.  Amazon translated its software competency and created a new business opportunity by using its existing infrastructure built for its traditional consumer business to support AWS requirements.  This allowed the company to provide web-based services quickly, efficiently, and at a low cost.

The catalyst for Amazon to create a broader developer business was the positive response to its release of product data in a developer-friendly format that could be manipulated directly by Amazon’s third-party affiliates.  It saw the opportunity to lead the movement toward “‘cloud computing’ – the provision of Internet-based information technology services.”[1]  While other major technology companies were beginning to develop similar technologies, Amazon was essentially dictating the future of the computing environment.  It had “technological competence, [the] ability to operate reliable and scalable services cost-effectively, first-mover advantage in this nascent space, and [the] ability to execute quickly positioned AWS well.”[2]  As such, “Amazon was at the front end of a broader move by other Internet giants – including Google, eBay, Inc., Yahoo!, and Microsoft – to host Web-based services for consumers and businesses and remain omnipresent during the next wave of the Web’s development.”[3]  In doing so, Amazon pushed the frontier in the technological space. 

Therefore, while AWS was very different from Amazon’s traditional consumer business, the company’s launch of infrastructure web-based services was significant in the shift toward open-source technology.  The company is changing the traditional market storage industry landscape and dictating the future of the computing environment. 

[1] Amazon Web Services Case, Harvard Business School, p. 1

[2] Ibid, p. 15

[3] Ibid, p. 9