chapter 14 enterprise and global management of information technology james a. o'brien, and...

Chapter 14 Enterprise and Global Management of

Information Technology

James A. O'Brien, and George Marakas. Management Information Systems with MISource 2007, 8th ed. Boston, MA: McGraw-Hill, Inc., 2007. ISBN: 13 9780073323091

Learning Objectives Identify each of the three components of

information technology managementUse examples to illustrate how they might be

implemented in a business Explain how failures in IT management can be

reduced by the involvement of business managers in IT planning and management

Identify several cultural, political, and geo-economic challenges that confront managers in the management of global IT

Chapter 14 Chapter 14 Enterprise and Global Management of Information Technology

Learning Objectives Explain the effect on global business/IT strategy

of the trend toward a transnational business strategy by international business organizations

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

Understand the fundamental concepts of outsourcing and offshoring, as well as the primary reasons for selecting such an approach to IS/IT management


Business and IT As the 21st century unfolds, many companies

are transforming themselves into global powerhouses via major investments inGlobal e-businessE-commerceOther IT initiatives

There is a need for business managers and professionals to understand how to manage this vital organizational function


Case 1 Alternative Governance Models The management of IT falls into five major governance

decision areas: IT principles, IT architecture, IT infrastructure, business application needs, and prioritization and investment decisions

How companies organize their business and IT management teams to make such decisions varies widely

UPS’s IT Governance An IT steering committee An IT governance committee A formal “charter” process: winnows down IT project

proposals to those best aligned with strategic objectives An escalation process to handle exceptions to

architecture standards Chapter 14 Chapter 14 Enterprise and Global Management of Information Technology

Case 1 Alternative Governance Models Manheim Interactive

Like most high-growth start-ups, the company did not tightly govern its IT architecture or infrastructure

The focus on speed of IT delivery was unsustainable as the online business matured

IT governance has now transitioned to a blend of centralized and decentralized arrangements

JPMorgan Chase Encourages autonomy to generate innovation and

recognize the very different requirements of its businesses

The company encourages the use of standardized technologies where they can provide economies of scale


Case 1 Alternative Governance Models ING Direct

The company is organized into nine country-based businesses

Each country operates autonomously, but the units share a common business model

Business solutions, IT technical components, and the infrastructure as standardized

A council comprised of CIOs and COOs makes enterprisewide principles, architecture, infrastructure, and investment decisions


Case Study Questions Is there a need for different IT governance arrangements among

companies? Why or why not? Use UPS, JPMorgan Chase, and ING Direct as examples to

defend your answer Should the IT governance of an e-commerce start-up like Manheim

Online differ from that used by its parent company, as Manheim Auctions was in this case? Should the IT governance of an e-commerce venture change

over time, as occurred with Manheim Online? The five major governance decision areas outlined in the case tell

us a lot about what is involved in the management of IT Which of the decision areas should primarily be the province of

the business management of the company? Which should primarily be the responsibility of IT management? Should all decisions be made jointly by both management

groups?Chapter 14 Chapter 14 Enterprise and Global Management of Information Technology

Components of IT Management


Managing Information Technology Managing the joint development and

implementation of business and IT strategiesUse IT to support strategic business prioritiesAlign IT with strategic business goals

Managing the development and implementation of new business/IT applications and technologies IS development

Managing the IT organization and infrastructureHardware, software, databases, networks, and

other resources Comparing IT Management Approaches - See

Figure 14.3 Chapter 14 Chapter 14 Enterprise and Global Management of Information Technology

Managing the IT Function Three things happened in the past few years

The Internet boom inspired businesses to connect their networks

Companies on on their intranets essential applications without which their businesses could not function

It became apparent that maintaining PCs on a network is very, very expensive

These things created an urgent need for centralization


Organizing IT Early Years

Centralization of computing with large mainframes

NextDownsizing and moving back to decentralization

CurrentCentralized control over the management of IT

while serving the strategic needs of business units

Hybrid of centralized and decentralized components


Avnet Marshall Organizational Components


Managing Application Development Application development management involves

Systems analysis and designPrototypingApplications programmingProject managementQuality assuranceSystem maintenance


Managing IS Operations IS operations management is concerned with

the use of hardware, software, network, and personnel resources in data centers

Operational activities that must be managedComputer system operationsNetwork managementProduction controlProduction support


System Performance Monitors Software packages that

Monitor the processing of computer jobsHelp develop a planned schedule of computer

operations that can optimize computer system performance

Product detailed statistics that are invaluable for effective planning and control of computing capacity


Features of System Performance Monitors Chargeback Systems

Allocates costs to users based on the information service rendered

Process Control CapabilitiesSystems that not only monitor but

automatically control computer operations at large data centers


IT Staff Planning Recruiting, training and retaining qualified

IS personnel Evaluating employee job performance and

rewarding outstanding performance with salary increases and promotions

Setting salary and wage levels Designing career paths


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 all information technology

planning and deploymentManages the IT platformSecond in command


Other IT Positions E-commerce architect Technical team leader Practice manager Systems analyst


Technology Management All information technologies must be managed

as a technology platform for integrating business applicationsBoth internally or externally focusedThe Internet, intranets, electronic commerce

and collaboration technologies, CRM software, enterprise resource planning, and supply chain management

Often the primary responsibility of a chief technology officer


Managing User Services Business units that support and manage end

user and workgroup computingCan be done with information centers

staffed with user liaison specialists or with Web-enabled intranet help desks

Key rolesTroubleshooting problemsGathering and communicating informationCoordinating educational effortsHelping with end user application

development


Outsourcing The purchase of goods or services from

third-party partners that were previously provided internally


Outsourcing’s Top Ten


Why Outsource? Save money – achieve greater ROI Focus on core competencies – organizations

can focus on the business that they are in Achieve flexible staffing levels Gain access to global resources Decrease time to market


Offshoring Relocation of an organization’s business

processes to a lower cost locationThis location is typically overseasCan be either production or service

Growth of services offshoring is linked to Availability of large amounts of reliable

and affordable communication infrastructureDigitization of many services


Failures in IT Management IT not used effectively

Computerizing traditional business processes instead of developing innovative e-business processes

IT not used efficientlyPoor response timesFrequent downtimesPoorly managed application development


Management Involvement & Governance Managerial and end user involvement

Key ingredient to high-quality information system performance

Involve business managers in IT managementGovernance structures, such as steering

committees


Sr. Management’s Involvement in IT


The International Dimension Companies around the world are developing

new models to operate competitively in a digital economyThese models are structured, yet agile,

global, yet localThey concentrate on maximizing the risk

adjusted return from both knowledge and technology assets


Case 2 Offshoring & Giving Away Technology

Only services can provide growth on the scale that IBM needs to make shareholders happy To combat cheaper offshore companies, IBM is giving away

technology In theory, giving away software, patents, and ideas will

Help the entire industry grow faster Open new frontiers Create opportunities for IBM to sell high-value products and

services To cut costs, IBM is also offshoring

India accounts for the largest number of IBMers outside the United States

By the end of next year, IBM Services head count in India will top 52,000 More than one-fourth of all services personnel About one-sixth of IBMers worldwide


Case Study Questions Do you agree with IBM’s employment response to

competition from software development contractors in India like Wipro that are expanding into IT consulting services?

Will IBM’s plan to give away some of its IT assets and intellectual property and increase support of opensource software products be a successful growth strategy in the “brutally competitive marketplace” in which it operates?

Do you agree with IBM researchers’ assumption that IT will remain “hard to use, expensive, and labor-intensive, with customers continuing to need help solving business problems” for along time to come? Should IBM bet its business on that assumption?


Global IT Management Dimensions


Global IT Management Challenges Political challenges

Many countries regulate or prohibit the transfer of data across their national boundaries

Others severely restrict, tax, or prohibit imports of hardware and software

Some have 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

Others require a business to spend part of the revenue they earn in a country in that nation’s economy


Global IT Management Challenges Geoeconomic challenges

Physical distances are still a major problem It may take too long to fly in specialists It is difficult to communicate in real time

across 24 time zonesMany countries do not have good telephone

and telecommunications services It may be hard to find skilled local workersThere can be great differences in the cost of

living and labor costs between countries


Global IT Management Challenges Cultural challenges

LanguagesCultural interestsReligionsCustomsPolitical philosophiesGlobal IT managers need cultural training

before they are sent on assignmentDifferent work styles and business

relationships


Transnational Strategies Companies are moving toward a transnational

strategyBusiness depends heavily on information

systems and Internet technologies to help integrate global business activities

Requires an integrated and cooperative worldwide IT platform


Transnational Business/IT Strategies


Global Business Drivers Business requirements caused by the nature of

the industry and its competitive or environmental forces

Examples of global drivers:CustomersProductsOperationsResourcesCollaboration


Global IT Platforms Hardware Difficulties

High prices High tariffs Import restrictions Long lead times for government approvals Lack of local service or spare parts Lack of documentation tailored to local conditions

Software Difficulties Packages developed in Europe may be incompatible

with American or Asian versions The software publisher may refuse to supply markets

that disregard software licensing and copyright agreements


International Data Communications Issues


The Internet as a Global IT Platform The Internet

An interconnected matrix that reaches tens of millions of users in over 100 countries

Business environment is free of traditional boundaries and limits

Without incurring massive cost outlays for telecommunications, companies canExpand marketsReduce communications and distribution

costs Improve profit margins


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?

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?


Internet Users by World Region


Global Data Access Issues Transborder Data Flows may be viewed as

violatingA nation’s sovereignty because it avoids

customs duties and regulationsLaws protecting the local IT industry

from competitionLaws protecting local jobsPrivacy legislation


U.S.-E.U. Data Privacy Requirements Key data privacy provisions

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


Internet Access in Restrictive Countries The struggle between Internet censorship and

openness at the national level revolves aroundControlling the conduitsFiltering the flowsPunishing the purveyors

Most of the world has decided that restricting Internet access is not a viable policyRestricting access also hurts a country’s

opportunities for economic growth and prosperity


Global Government Internet Restrictions High Government Access Fees

Kazakhstan, Kyrgyzstan Government Monitored Access

China, Iran, Saudi Arabia, Azerbaijan, Ubekistan

Government Filtered AccessBelarus, Cuba, Iraq, Tunisia, Sierra Leone,

Tajikistan, Turkmenistan, Vietnam No Public Access Allowed

Burma, Libya, North KoreaChapter 14 Chapter 14 Enterprise and Global Management of Information Technology

Global Systems Development

Key development issuesConflicts over local versus global system

requirementsTrying to agree on common system featuresDisturbances caused by systems

implementation and maintenance activitiesGlobal standardization of data definitions


Systems Development Strategies Key strategies for global systems development

Transform an application used by the home office or a subsidiary into a global application

Set up a multinational development teamParallel developmentCenters of excellenceOffshore development


Case 3 Thinking & Acting Globally Globalization means different things to different people

There’s no single method for how it operates Too often, strategic motivations for globalization aren’t matched

by operational approaches to meet enterprise needs Operating globally means striking a balance between central

and local control of operations To ensure that IT-globalization decisions match the enterprises core

needs and approaches 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

Other issues to consider The diversity of countries in which the company operates The IT maturity in these countries


Case Study Questions What are some of the forces driving IT

organizations to globalize? What are some of the local forces and

challenges facing modern IT organizations? How does a CEO manage the requirement to

both globalize and localize the IT function?


Case 4 The Hard Road to Outsourcing Outsourcing IT work abroad can cut the cost of

IT by 39 percent It carries privacy risks It threatens U.S. jobs


Case Study Questions The law does not provide for companies to

disclose to their customers that they have outsourced or offshored access to their data

Is this a potential problem for either the company or the customer?

What is meant by the term “best-of-breed model?” Why has this approach worked for Boeing?

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?


chapter 14 enterprise and global management of information technology james a. o'brien, and...

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