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McGraw-Hill/Irwin Copyright 2007 by The McGraw-Hill Companies, Inc. All rights reserved.


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Enterprise and Global

Management of Information

TechnologyManagement of Information Technology

Outsourcing and Offshoring

Global Business/IT Strategy

apter

12

McGraw-Hill/Irwin Copyright 2007 by The McGraw-Hill Companies, Inc. All rights reserved.


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Learning Objectives

1. Identify each of the three components ofinformation technology management, and useexamples 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 managersin IT planning and management.

3. Identify several cultural, political, and geoeconomicchallenges that confront managers in themanagement of global information technologies.


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Learning Objectives

4. Explain the effect on global business/IT strategy ofthe trend toward a transnational business strategyby international business organizations.

5. Identify several considerations that affect the choiceof IT applications, IT platforms, data access policies,and systems development methods by a globalbusiness enterprise.

6. Understand the fundamental concepts ofoutsourcing and offshoring as well as the primaryreasons for selecting such an approach to IS/ITmanagement.


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Case 1: Some People Just NeverLearn

IT failures

Show up in earnings losses

User companies often file lawsuits against vendors or

consultants Notorious 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 thosediscussed 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 priorto 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 suchfailures in the future?


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Real World Group Activity

As we learned in Chapter 10, an IT project can fail asa result of mistakes that occur even during the latestages of implementation. In small groups,

Discuss how you would manage a project to ensure itssuccess.

What are the key success factors that you would payclose attention to in your project.


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Components of ITManagement


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Managing Information Technology

Managing the joint development and implementationof business and IT strategies

Use IT to support the strategic business priorities

Align IT with strategic business goalsManaging the development and implementation of

new business/IT applications and technologies

Managing information systems development

Managing the IT organization and IT infrastructure

Hardware, software, database, networks and otherresources


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Business/IT Planning Process


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Components of Business/ITPlanning

Strategy Development

Developing business strategies that support acompanys business vision

Resource Management Developing strategic plans for managing or

outsourcing a companys IT resources

Technology Architecture

Making strategic IT choices that reflect an informationtechnology architecture designed to support acompanys business/IT initiatives


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Information TechnologyArchitecture

Technology Platform

Networks, computer systems, system software andintegrated enterprise application software

Data Resources Operational and specialized databases

Store and provide data and information for businessprocesses and decision support


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Information TechnologyArchitecture

Applications Architecture

Integrated architecture of enterprise systems thatsupport strategic business initiatives as well as cross-

functional business processes IT Organization

Organizational structure of the IS function within acompany and the distribution of IS specialists


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Organizing IT

Early years: centralization of computing with largemainframes

Next: downsizing trend with a move back to

decentralizationCurrent: centralized control over the management of

IT while serving strategic needs of business units

Hybrid of both centralized and decentralized

components


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Organizational Components ofIT at Avnet Marshall


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Application DevelopmentManagement

Managing activities such as:

Systems analysis and design, prototyping, applicationsprogramming, project management, quality assurance,and system maintenance for all major business/ITdevelopment projects


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IS Operations Management

Use of hardware, software, network, and personnelresources in the corporate or business unit datacenters of an organization

Includes computer systems operations, networkmanagement, production control and productionsupport

Data centers are the computer centers of anorganization


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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 systemperformance, and

Produce detailed statistics that are invaluable foreffective planning and control of computing capacity


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Features of Systems Performance

Monitors

Chargeback Systems

Allocate costs to users based on the informationservices rendered

Process 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 ISpersonnel

Evaluate employee job performances and reward

outstanding performances with salary increases andpromotions

Set salary and wage levels and design career paths soindividuals 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 manycompanies, and brings them into alignment withstrategic business goals

Chief Technology Officer (CTO)

In charge of technology management: all informationtechnology planning and deployment

Managing the IT platform Second in command


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Managing User Services

Business units that support and manage end user andworkgroup computing

Can be done with information centers staffed with

user liaison specialistsOr with Web-enabled intranet help desks


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Outsourcing

The purchase of goods or services from third-partypartners that were previously provided internally


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Outsourcings Top Ten


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Why outsource?

Save money achieve greater ROI

Focus on core competencies organization can focuson the business that they are in

Achieve flexible staffing levelsGain access to global resources

Decrease time to market


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Offshoring

Relocation of an organizations business processes

To a lower-cost location, usually overseas


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IT Management Failures

IT not used effectively

Computerize traditional business processes

Instead of developing innovative e-business processes

IT not used efficiently Poor response times and frequent downtimes

Poorly managed application development projects

M t I l t d


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Management Involvement andGovernance

Managerial and end user involvement

Key ingredient to high-quality information systemsperformance

Involve managers in the management of IT Governance structures such as steering committees

S i t i l t


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Senior managements involvement

in business/IT decisions

C 2 CIO N d t Thi k Gl b ll


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Case 2: CIOs Need to Think Globallyand Act Locally

Enterprises globalize for different reasons

Examples: global customers, seeking growthopportunities, cost efficiencies

CIOs IT globalization decisions should Determine the balance of global integration versus local

responsiveness

Align ITs major processes with the enterprises

governance orientationAssign staff, roles, and competencies appropriately


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1. What are some of the forces driving ITorganizations 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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1. One of the issues facing the CIO is the assessmentof IT maturity in the countries they operate in.Using the Internet,

See if you can find examples of countries where the ITmaturity is still low and, thus presents a greaterchallenge.

What are the characteristics of a low IT maturitycountry?


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One of the prescriptions offered in the case was toalign ITs major processes with the enterprisesgovernance orientation. In small groups,

Discuss the meaning of this prescription.

What is meant by governance orientation?

How can IT become better aligned with theorganization in this regard?

Is there one right way to govern IT?


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Global IT Management

Develop appropriate business and IT strategies forthe global marketplace

Develop the portfolio of business applications

needed to support business/IT strategiesDetermine the technology platform needed

Determine the systems development projects thatwill produce the required global information systems



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Global IT ManagementDimensions



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Global IT ManagementChallenges

Political

Geoeconomic effects of geography on the economicrealities of international business activities

Cultural


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Political Challenges

Rules regulating or prohibiting transfer of data acrossnational boundaries

Severely restricted, taxed, or prohibited imports of

hardware and softwareLocal content laws that specify the portion of the

value of a product that must be added in that countryif it is to be sold there

Reciprocal trade agreements that require a businessto spend part of the revenue they earn in a country inthat nations economy


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Geoeconomic Challenges

Sheer physical distances

Difficult to get good-quality telephone andtelecommunications services

Differences in the cost of living and labor costs


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Cultural Differences

Languages

Cultural Interests

Religions

CustomsSocial Attitudes

Political Philosophies


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Transnational Strategies

Business depends heavily on its information systemsand Internet technologies to help integrate globalbusiness activities

Develop an integrated and cooperative worldwide ITplatform

Transnational Business/IT


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Transnational Business/ITstrategies


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Global Business Drivers

Business requirements caused by the nature of theindustry and its competitive or environmental forces

Examples of drivers:

Global Customers Global Products

Global Operations

Global Resources

Global Collaboration

Gl b l l f


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Global IT Platform

Managing the hardware, software, data resources,telecommunications networks, and computingfacilities that support global business operations

Technically complex with major political and culturalimplications

International Data


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International Data

Communications Top 10 Issues

I t t Gl b l IT Pl tf


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Internet as a Global IT Platform

Technology platform free of many traditionalinternational boundaries and limits

Expand markets, reduce communications anddistribution costs, and improve profit marginswithout massive cost outlays for telecommunications

Key Questions for Global


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Key Questions for GlobalWebsites

Will you have to develop a new navigational logic toaccommodate cultural preferences?

What content will you translate, and what contentwill you create from scratch to address regionalcompetitors or products that differ from those in theU.S.?

Should your multilingual effort be an adjunct to your

main site, or will you make it a separate site, perhapswith a country-specific domain?

Key Questions for Global


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Key Questions for GlobalWebsites

What kinds of traditional and new media advertisingwill you have to do in each country to draw traffic toyour site?

Will your site get so many hits that youll need to setup a server in a local country?

What are the legal ramifications of having yourwebsite targeted at a particular country, such as laws

on competitive behavior, treatment of children, orprivacy?

I t t U b W ld R i


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Internet Users by World Region

Gl b l D t A I


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Global Data Access Issues

Transborder Data Flows Business data flow across international borders over

the telecommunications networks of global informationsystems

May be viewed as violating a nations sovereigntybecause avoids custom duties

Or violating their laws to protect local IT industry fromcompetition or their labor regulations for protecting

local jobs

U S E U Data Pri ac Req irements


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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 data

Access for consumers to their information

Adequate security, data integrity and enforcementprovisions

Internet Access Issues in Most


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Restrictive Countries

High Government Access FeesGovernment Monitored Access

Government Filtered Access

No Public Access Allowed

Global Systems Development


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Global Systems Development

Conflicts over local versus global systemrequirements

Difficulties in agreeing on common system features

Disturbances caused by systems implementation andmaintenance activities

Global standardization of data definitions

Systems Development


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y pStrategies

Transform an application used by the home officeinto a global application

System used by a subsidiary that has the best versionof an application will be chosen for global use

Set up a multinational development team with keypeople from several subsidiaries to ensure that thesystem design meets the needs of local sites as well as

corporate headquarters

Systems Development


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StrategiesParallel Development parts of the system are

assigned to different subsidiaries and the home officeto develop at the same times based on the expertiseand experience at each site

Centers of Excellence an entire system may beassigned for development to a particular subsidiarybased on their expertise in the business or technicaldimensions needed for successful development

Offshore Development outsource the developmentwork to a global development company

Internet-enabled Collaboration in IT


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Development

Source: Adapted from Jon Udell, Leveraging a Global Advantage, Infoworld, April 21, 2003, p. 35.

Case 3: The Hard Road to


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OutsourcingCan cut the cost of IT work by 39 percent by

outsourcing it abroad

But it carries privacy risks

And threatens US jobs



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1. The law does not provide for companies to discloseto their customers the fact that they haveoutsourced or offshored access to their data. Is thisa 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 outsourcingprojects. Is it possible to outsource too much?



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1. Each of the companies in the case shares a commongoal, but from a different perspective. As welearned in the chapter, there are a variety of reasonswhy 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 thethree outlined in the case.

What were their reasons?



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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 protectjobs?

Are new jobs being created to replace the ones lost?

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obrien13e_chap012