Siemens Ag: Global Development Strategy (a)

Siemens AG: Global Development Strategy (A)

Siemens' became a leading industrial giant in areas related with technology and telecommunications. Siemens' Information and Communication Networks Division (ICN) a part of the company emerged as a global provider of telecommunication solutions. To support the growth of the markets and knowledge needs the company had to grow out borders, expanding to international markets by creating regional development centers (RDCs) like Boca Raton (United States) or Bangalore (India).

To strengthen its global presence they followed a strategy of shifting more autonomy to its regional centers due to diverse reasons. Firstly, because of local labor shortages, ICN could simply not centralize all product development at Munich. Second, having regionally-based managers, engineers and technicians facilitated rapid response to local needs such as EWSD customization.

As RDC became more used to the processes and gain more technical skills they also started to gain more control. Typically, the German managers would run newly formed RDCs. Some questions were still creating some tensions for the German managers, like:

? How much independence should the RDCs have;

? How much direction to provide developers working on subsystems in different RDCs.

Munich headquarters typically coordinated cooperation between RDC's through formal channels, including annual technical conferences at Munich involving representatives from different RDCs, as well as through facilitating informal, often serendipitous encounters between different RDC members at Munich.

As the telecommunication industry was growing fast, Siemens involved Bangalore in an ambitious project – the development of Net Manager. Bangalore was an attractive RDC for this project mainly because of the labor costs savings. Even though Boca Raton would have been more suitable due to their experience in managing large and complex projects and extensive knowledge of the EWSD, Bangalore was chosen counting in favor besides the costs savings the experience of the staff with personal computer-based programming.

The industry meanwhile kept developing and what was supposed to be a "low-end" project became a complex and highly visible product for large customers like Deutsche Telekom. Soon we can see changes in the scope and increase in the staff involved in the project.

By 1999, Bangalore technicians sent out a testing version of the Net Manager to Munich and it didn't take more than a day for the entire system to crash out. As it turned out, subsystems were far more interdependent than had been assumed. Since Bangalore developers worked thousands of kilometers away from then Munich test beds, testing of newly integrated system turned out to be a major obstacle. Bangalore didn't think of asking what loads to test with, but Munich was also fault for not telling them.

During this project, we can see many issues like miscommunication, which can be attributed to cultural