enterprise and global management of information technology
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Avnet Marshall Organizational Components
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Managing Application Development Application development management involves
Systems analysis and designPrototypingApplications programmingProject managementQuality assuranceSystem maintenance
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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
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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
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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
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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
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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 all information technology
planning and deploymentManages the IT platformSecond in command
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Other IT Positions E-commerce architect Technical team leader Practice manager Systems analyst
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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
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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
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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 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
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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
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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
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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
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Sr. Management’s Involvement in IT
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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
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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
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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?
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Global IT Management Dimensions
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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
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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
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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
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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
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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 global drivers:CustomersProductsOperationsResourcesCollaboration
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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
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International Data Communications Issues
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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
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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?
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 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
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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
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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
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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
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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
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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
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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?
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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
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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?
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