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12-1McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
Enterprise and Global Management of Information
TechnologyManagement of Information Technology
Outsourcing and OffshoringGlobal Business/IT Strategy
Chapter
12
McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
12-3
Learning Objectives
1. Identify each of the three components of information technology management, and use examples to illustrate how they might be implemented in a business.
2. Explain how failures in IT management can be reduced by the involvement of business managers in IT planning and management.
3. Identify several cultural, political, and geoeconomic challenges that confront managers in the management of global information technologies.
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Learning Objectives
4. Explain the effect on global business/IT strategy of the trend toward a transnational business strategy by international business organizations.
5. Identify several considerations that affect the choice of IT applications, IT platforms, data access policies, and systems development methods by a global business enterprise.
6. Understand the fundamental concepts of outsourcing and offshoring as well as the primary reasons for selecting such an approach to IS/IT management.
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Case 1: Some People Just Never Learn
IT failuresShow up in earnings lossesUser companies often file lawsuits against
vendors or consultantsNotorious failures are usually big and complex
projects Companies repeat the same mistakes
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Case Study Questions
1. What are some of the reasons projects such as those discussed in the case end up as failures?
2. What key management decisions might help to prevent IT failures?
3. Why are companies often too embarrassed to report their IT failures?
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Real World Internet Activity
1. The IT failures reported in the case occurred prior to 2000. Using the Internet,
See if you can find examples of more recent IT failures.
What caused them to occur? Have we learned anything to help prevent such
failures in the future?
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Real World Group Activity
As we learned in Chapter 10, an IT project can fail as a result of mistakes that occur even during the late stages of implementation. In small groups,Discuss how you would manage a project to
ensure its success.What are the key success factors that you would
pay close attention to in your project.
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Components of IT Management
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Managing Information Technology
Managing the joint development and implementation of business and IT strategiesUse IT to support the strategic business prioritiesAlign IT with strategic business goals
Managing the development and implementation of new business/IT applications and technologiesManaging information systems development
Managing the IT organization and IT infrastructureHardware, software, database, networks and
other resources
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Business/IT Planning Process
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Components of Business/IT Planning
Strategy DevelopmentDeveloping business strategies that support a
company’s business visionResource Management
Developing strategic plans for managing or outsourcing a company’s IT resources
Technology Architecture Making strategic IT choices that reflect an
information technology architecture designed to support a company’s business/IT initiatives
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Information Technology Architecture
Technology Platform Networks, computer systems, system software
and integrated enterprise application softwareData Resources
Operational and specialized databases Store and provide data and information for
business processes and decision support
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Information Technology Architecture
Applications Architecture Integrated architecture of enterprise systems
that support strategic business initiatives as well as cross-functional business processes
IT Organization Organizational structure of the IS function within
a company and the distribution of IS specialists
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Organizing IT
Early years: centralization of computing with large mainframes
Next: downsizing trend with a move back to decentralization
Current: centralized control over the management of IT while serving strategic needs of business unitsHybrid of both centralized and decentralized
components
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Organizational Components of IT at Avnet Marshall
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Application Development Management
Managing activities such as: Systems analysis and design, prototyping,
applications programming, project management, quality assurance, and system maintenance for all major business/IT development projects
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IS Operations Management
Use of hardware, software, network, and personnel resources in the corporate or business unit data centers of an organization
Includes computer systems operations, network management, production control and production support
Data centers are the computer centers of an organization
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System Performance Monitors
Software packages that Monitor the processing of computer jobs, Help develop a planned schedule of computer
operations that can optimize computer system performance, and
Produce detailed statistics that are invaluable for effective planning and control of computing capacity
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Features of Systems Performance Monitors
Chargeback Systems Allocate costs to users based on the information
services renderedProcess Control Capabilities
Systems that not only monitor but automatically control computer operations at large data centers
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IT Staff Planning
Recruiting, training and retaining qualified IS personnel
Evaluate employee job performances and reward outstanding performances with salary increases and promotions
Set salary and wage levels and design career paths so individuals can move to new jobs through promotion and transfer as they gain in seniority and expertise
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IT Executives
Chief Information Officer (CIO)Oversees all uses of information technology in
many companies, and brings them into alignment with strategic business goals
Chief Technology Officer (CTO)In charge of technology management: all
information technology planning and deployment
Managing the IT platformSecond in command
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Managing User Services
Business units that support and manage end user and workgroup computing
Can be done with information centers staffed with user liaison specialists
Or with Web-enabled intranet help desks
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Outsourcing
The purchase of goods or services from third-party partners that were previously provided internally
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Outsourcing’s Top Ten
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Why outsource?
Save money – achieve greater ROIFocus on core competencies – organization
can focus on the business that they are inAchieve flexible staffing levelsGain access to global resourcesDecrease time to market
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Offshoring
Relocation of an organization’s business processes
To a lower-cost location, usually overseas
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IT Management Failures
IT not used effectivelyComputerize traditional business processesInstead of developing innovative e-business
processesIT not used efficiently
Poor response times and frequent downtimesPoorly managed application development
projects
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Management Involvement and Governance
Managerial and end user involvementKey ingredient to high-quality information
systems performanceInvolve managers in the management of IT
Governance structures such as steering committees
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Senior management’s involvement in business/IT
decisions
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Case 2: CIOs Need to Think Globally and Act Locally
Enterprises globalize for different reasonsExamples: global customers, seeking growth
opportunities, cost efficienciesCIO’s IT globalization decisions should
Determine the balance of global integration versus local responsiveness
Align IT’s major processes with the enterprise’s governance orientation
Assign staff, roles, and competencies appropriately
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Case Study Questions
1. What are some of the forces driving IT organizations to globalize?
2. What are some of the local forces and challenges facing modern IT organizations?
3. How does a CIO manage the requirements to both globalize and localize the IT function?
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Real World Internet Activity
1. One of the issues facing the CIO is the assessment of IT maturity in the countries they operate in. Using the Internet,
See if you can find examples of countries where the IT maturity is still low and, thus presents a greater challenge.
What are the characteristics of a low IT maturity country?
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Real World Group Activity
One of the prescriptions offered in the case was to “align IT’s major processes with the enterprise’s governance orientation.” In small groups,Discuss the meaning of this prescription.What is meant by “governance orientation?”How can IT become better aligned with the
organization in this regard?Is there one right way to govern IT?
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Global IT Management
Develop appropriate business and IT strategies for the global marketplace
Develop the portfolio of business applications needed to support business/IT strategies
Determine the technology platform neededDetermine the systems development projects
that will produce the required global information systems
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Global IT Management Dimensions
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Global IT Management Challenges
PoliticalGeoeconomic – effects of geography on the
economic realities of international business activities
Cultural
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Political Challenges
Rules regulating or prohibiting transfer of data across national boundaries
Severely restricted, taxed, or prohibited imports of hardware and software
Local content laws that specify the portion of the value of a product that must be added in that country if it is to be sold there
Reciprocal trade agreements that require a business to spend part of the revenue they earn in a country in that nation’s economy
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Geoeconomic Challenges
Sheer physical distancesDifficult to get good-quality telephone and
telecommunications servicesDifferences in the cost of living and labor costs
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Cultural Differences
LanguagesCultural InterestsReligionsCustomsSocial AttitudesPolitical Philosophies
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Transnational Strategies
Business depends heavily on its information systems and Internet technologies to help integrate global business activities
Develop an integrated and cooperative worldwide IT platform
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Transnational Business/IT strategies
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Global Business Drivers
Business requirements caused by the nature of the industry and its competitive or environmental forces
Examples of drivers:Global CustomersGlobal ProductsGlobal OperationsGlobal ResourcesGlobal Collaboration
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Global IT Platform
Managing the hardware, software, data resources, telecommunications networks, and computing facilities that support global business operations
Technically complex with major political and cultural implications
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International Data Communications Top 10 Issues
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Internet as a Global IT Platform
Technology platform free of many traditional international boundaries and limits
Expand markets, reduce communications and distribution costs, and improve profit margins without massive cost outlays for telecommunications
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Key Questions for Global Websites
Will you have to develop a new navigational logic to accommodate cultural preferences?
What content will you translate, and what content will you create from scratch to address regional competitors or products that differ from those in the U.S.?
Should your multilingual effort be an adjunct to your main site, or will you make it a separate site, perhaps with a country-specific domain?
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Key Questions for Global Websites
What kinds of traditional and new media advertising will you have to do in each country to draw traffic to your site?
Will your site get so many hits that you’ll need to set up a server in a local country?
What are the legal ramifications of having your website targeted at a particular country, such as laws on competitive behavior, treatment of children, or privacy?
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Internet Users by World Region
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Global Data Access Issues
Transborder Data FlowsBusiness data flow across international borders
over the telecommunications networks of global information systems
May be viewed as violating a nation’s sovereignty because avoids custom duties
Or violating their laws to protect local IT industry from competition or their labor regulations for protecting local jobs
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U.S.-E.U Data Privacy Requirements
Notice of purpose and use of data collectedAbility to opt out of third-party distribution of
dataAccess for consumers to their informationAdequate security, data integrity and
enforcement provisions
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Internet Access Issues in Most Restrictive Countries
High Government Access FeesGovernment Monitored AccessGovernment Filtered AccessNo Public Access Allowed
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Global Systems Development
Conflicts over local versus global system requirements
Difficulties in agreeing on common system features
Disturbances caused by systems implementation and maintenance activities
Global standardization of data definitions
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Systems Development Strategies
Transform an application used by the home office into a global application
System used by a subsidiary that has the best version of an application will be chosen for global use
Set up a multinational development team with key people from several subsidiaries to ensure that the system design meets the needs of local sites as well as corporate headquarters
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Systems Development Strategies
Parallel Development – parts of the system are assigned to different subsidiaries and the home office to develop at the same times based on the expertise and experience at each site
Centers of Excellence – an entire system may be assigned for development to a particular subsidiary based on their expertise in the business or technical dimensions needed for successful development
Offshore Development – outsource the development work to a global development company
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Internet-enabled Collaboration in IT Development
Source: Adapted from Jon Udell, “Leveraging a Global Advantage,” Infoworld, April 21, 2003, p. 35.
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Case 3: The Hard Road to Outsourcing
Can cut the cost of IT work by 39 percent by outsourcing it abroad
But it carries privacy risksAnd threatens US jobs
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Case Study Questions
1. The law does not provide for companies to disclose to their customers the fact that they have outsourced or offshored access to their data. Is this a potential problem for either the company or the customer? Why or why not?
2. What is meant by the term “best-of-breed model?” Why has this approach worked for Boeing?
3. GE wants to outsource its entire ERP system based, in part, on its successes with other outsourcing projects. Is it possible to outsource too much?
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Real World Internet Activity
1. Each of the companies in the case shares a common goal, but from a different perspective. As we learned in the chapter, there are a variety of reasons why a company may choose to outsource. Using the Internet and Figure 12.8 as your guide,
See if you can find examples of companies who have chosen to outsource for reasons different from the three outlined in the case.
What were their reasons?
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Real World Group Activity
Outsourcing and offshoring are controversial issues – particularly when it comes to jobs. In small groups,Discuss the pros and cons of this issue.Should we curtail outsourcing and offshoring to
protect jobs?Are new jobs being created to replace the ones
lost?
