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Chapter

12

Enterprise and Global Management of

Information Technology

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Learning Objectives

Identify ways that information technology has affected the job of managers.

Identify the seven major dimensions of a networked organization and explain how they can affect the success of a business.

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Learning Objectives (continued)

Identify each of the three components of information technology management and use examples to show how they might be implemented in a business.

Explain how failures in IT management can be reduced by the involvement of business managers in IS planning and management.

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Learning Objectives (continued)

Identify cultural, political, and geoeconomic challenges that confront managers in the management of global information technologies.

Explain the effect on global e-business strategy of the trend toward a transnational business strategy by international business organizations.

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Learning Objectives (continued)

Identify considerations that affect the choice of IT applications, IT platforms, data access policies, and systems development methods by a global business enterprise.

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Section I

Managing Information Technology

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Business and IT

As companies are transformed into global e-businesses and players in global e-commerce, it is vital for business managers and professionals to understand how to manage this vital function.

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The Impact of IT on Managers

A major force for precipitating or enabling organizational and managerial change

Enables innovative changes in managerial decision making, organizational structures, and managerial work activities

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The Impact of IT on Organizations

Key dimensions of the networked enterpriseOrganizational structureLeadership and governancePeople and cultureCoherenceKnowledgeAlliances

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Managing Information Technology

Three major componentsManaging the joint development and

implementation of e-business and IT strategies

Managing the development of e-business applications and the research & implementation of new IT

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Managing Information Technology (continued)

Three major components (continued)Managing the IT processes, professionals, &

subunits with the IT organization & IS function

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Managing the IS Function

Organizing ITCentralizationDecentralizationLatest trend, hybrid

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Managing the IS Function (continued)

Managing Application DevelopmentInvolves managing activities such as

systems analysis and design prototypingapplications programming project managementquality assurancesystems maintenance

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Managing the IS Function (continued)

Managing IS OperationsManaging the use of hardware, software,

network, and personnel resources in data centers/computer centers within an organization

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Managing the IS Function (continued)

Managing IS operations (continued)Operational activities requiring

managementComputer systems operationsNetwork managementProduction controlProduction support

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Managing the IS Function (continued)

Managing IS Operations (continued)System Performance Monitors

Monitor processing of computer jobsHelps develop a planned scheduleProduce detailed stats for planning and

control of computing capacityChargeback systemsProcess control

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Managing the IS Function (continued)

Human Resource Management of ITRecruit qualified personnelDevelop, organize, and direct the capabilities

of existing personnelTrain employeesDesign career paths and set salary and wage

levels

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Managing the IS Function (continued)

The CIO and Other IT ExecutivesChief Information Officer (CIO)

Oversees all use of IT in many companies.Brings the IT function into alignment with

strategic business goalsConcentrates on business/IT planning and

strategyHelps develop strategic uses of IT in e-

business and e-commerce

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Managing the IS Function (continued)

Technology ManagementAll IT must be managed as a technology

platform for integrated e-business and e-commerce systems

May assign a Chief Technology Officer (CTO)In charge of all IT planning and

deployment

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Managing the IS Function (continued)

Managing User ServicesFunctions to support and manage end user

and workgroup computingProvides both opportunities and problems

for business unit managersHelp desksEstablish and enforce policies

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Failures in IT Management

IT is not being used effectively by companies that use IT primarily to computerize traditional business processes, instead of using it for innovative e-business processes

IT is not being used efficiently by IS that provide poor response times and frequent down times or when application development projects are not managed properly

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Failures in IT Management (continued)

Management Involvement and GovernanceSenior management needs to be involved in

critical business/IT decisions to optimize the business value and performance of the IT function.Requires development of governance

structures that encourage active participation in planning and controlling the business uses of IT.

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Failures in IT Management (continued)

Helps avoid IS performance problems

Helps improve the strategic business value of IT

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Section II

Managing Global IT

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The International Dimension

A vital part of managing an e-business enterprise in the internetworked global economies and markets of today.

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Global IT Management

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Cultural, Political, and Geoeconomic Challenges

Cultural challengesDifferences in languagesCultural interestsReligionsCustomsSocial attitudesPolitical philosophies

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Cultural, Political, and Geoeconomic Challenges (continued)

Political challengesRules regulating or prohibiting transfer of

data across their national boundariesSevere restrictions, taxes, or prohibitions

against imports of hardware and softwareLocal content lawsReciprocal trade agreements

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Cultural, Political, and Geoeconomic Challenges (continued)

Geoeconomic ChallengesThe effects of geography on the economic

realities of international business activitiesDistanceReal-time communicationLack of good-quality telephone and

telecommunications serviceLack of job skillsCost of living and labor costs

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Global e-Business Strategies

Moving away fromAutonomous foreign subsidiariesAutonomous foreign subsidiaries, dependent

on headquarters for new processes, products, and ideas

Close management of worldwide operations by headquarters

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Global e-Business Strategies (continued)

Moving towardReliance on information systems and

Internet technologies to help integrate global business activities

An integrated, cooperative worldwide hardware, software, and Internet-based architecture for IT platforms

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Global e-Business Applications

IT applications depend on a variety of global business drivers, caused by the nature of the industry and its competitive or environmental forcesGlobal customersGlobal productsGlobal operationsGlobal resourcesGlobal collaboration

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Global IT Platforms

The technology infrastructureTechnically complex Major political and cultural implicationsChallenges

Managing international data communications networksNetwork management issuesRegulatory issuesTechnology issuesCountry-oriented issues

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Global IT Platforms (continued)

The Internet as a Global IT PlatformCompanies can

Expand marketsReduce communications and distribution

costsImprove their profit margins

Low cost interactive channel for communications and data exchange

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Global Data Access Issues

Transborder data flows (TDF)Data flow across international borders over

telecommunications networks of global information systems

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Global Data Access Issues (continued)

Many countries view TDF as violating their national sovereignty

Others, as violating their laws to protect the local IT industry or to protect local jobs

May view TDF as a violation of their privacy legislation

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Global Data Access Issues (continued)

Internet Access IssuesHigh government access feesGovernment monitored accessGovernment filtered accessNo public access allowed

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Global Systems Development

ChallengesConflicts over local versus global system

requirementsDifficulties agreeing on common system

featuresDisturbances caused by systems

implementation and maintenance activities

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Global Systems Development (continued)

Challenges (continued)Trade-offs between developing one system

that can run on multiple computer and operating system platforms, or letting each local site customize the software for its own platform

Global standardization of data definitions

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Global Systems Development (continued)

Systems Development StrategiesTransforming an application used by the

home office into a global applicationSetting up a multinational development

team to ensure the system design meets the needs of local sites as well as headquarters

Parallel developmentCenters of excellence

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Discussion Questions

What has been the impact of e-business technologies on the work relationships, activities, and resources of managers?

What can business unit managers do about performance problems in the use of information technology and the development and operation of information systems in their business units?

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Discussion Questions (continued)

How are Internet technologies affecting the structure and work roles of modern organizations? Will middle management wither away? Will companies consist primarily of self-

directed project teams of knowledge workers?

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Discussion Questions (continued)

Should the IS function in a business be centralized or decentralized? What recent developments support your answer?

How will the Internet, intranets, and extranets affect each of the components of global information technology management?

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Discussion Questions (continued)

How might cultural, political, or geoeconomic challenges affect a global company’s use of the Internet?

Will the increasing use of the Internet by firms with global e-business operations change their move toward a transnational business strategy?

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Discussion Questions (continued)

How might the Internet, intranets, and extranets affect the business drivers or requirements responsible for a company’s use of global IT, as shown in the chapter?

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Real World Case 1 – USG Corp.

Evaluating the ROI of IT Investments

Why do many companies fail to evaluate the return on investment of their IT projects?

Is this good business practice?

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Real World Case 1 (continued)

What are some of the ROI measurement and incentive practices of the companies in this case that might help other companies evaluate the ROI of their IT investments?

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Real World Case 1 (continued)

Should business managers be responsible for justifying the ROI of IT investments that will benefit their business units?

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Real World Case 1 (continued)

Who should be involved in evaluating the ROI of the IT investment proposals of a company’s business units?

Why?

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Real World Case 2 – Agilent Technologies & Citibank

The Challenges of Consolidating Global IT

Do you agree with Agilent’s global IT consolidation goals and process?

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Real World Case 2 (continued)

Why did Agilent’s global IT consolidation get such a strong negative response from many business and IT stakeholders?

Could this reaction have been avoided?

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Real World Case 2 (continued)

What are the business benefits of Citibank’s global IT consolidation project?

How can a single global system still be customized for each country?

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Real World Case 2 (continued)

What challenges might arise in managing the global IT function at Agilent Technologies from this point on?

How would you meet such challenges?

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Real World Case 3 – Cisco Systems

Failure in Supply Chain Management

What caused Cisco’s $2.2 billion loss in unneeded inventory?

Could this situation have been avoided?

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Real World Case 3 (continued)

How is eHub supposed to avoid such losses in the future?

What problems might arise with this new system?

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Real World Case 3 (continued)

What can be done in the supply chain management process of any company to avoid situations like Cisco’s?

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Real World Case 4 – Merrill Lynch & Co.

The Business Case for Global IT Consolidation

Why has there been a trend toward centralizing systems among financial services firms?

What are the potential benefits and limitations of this trend?

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Real World Case 4 (continued)

What are the business benefits of Merrill Lynch’s new global order processing system?

What implementation challenges are involved?

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Real World Case 4 (continued)

Does the merger of Merrill’s global services division and its IT division make good business sense?

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Real World Case 5 – Fireman’s Fund, Allmerica Financial, & FMC

The Business Case for IT Outsourcing

What is the business value to Fireman’s Fund and Allmerica of outsourcing their computer operations?

What are some potential limitations of such outsourcing arrangements?

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Real World Case 5 (continued)

What is FMC’s motivation for its IT outsourcing?

What is the role of an IT organization at companies like those in this case, if much of their IT operations are outsourced?

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Real World Case 5 (continued)

What are the benefits and potential limitations of offshore and near-shore IT outsourcing arrangements?