Enterprise and Global Management of Information

Technology

Chapter 12

Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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Learning Objectives

Identify the three components of information technology management– Use 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

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Learning Objectives

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

Explain how the trend toward a transnational business strategy by international business organizations affects global business/IT strategy

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Learning Objectives

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

Global e-business

E-commerce

As the 21st century unfolds, many companies are transforming themselves into global powerhouses

via major investments in…

Other IT initiatives

Business managers and professionals must know how to manage this vital organizational function

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Case 1: Toyota, Procter & Gamble, Hess Corp…

The role of a CIO has become very strategic– Tomorrow’s CIOs will be even more involved

in strategic thinking and influential – Skills needed to be a CIO have changed from

being a technologist to business strategist

Developing and mentoring successors is a key responsibility of IT leaders in an environment that includes the changing role of the CIO and a shortage of qualified managers

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Case Study Questions

Several comments in the case note that CIOs are in a unique position for companywide leadership, extending beyond their primary technological concerns

– Why do you think this is the case?

– How are CIOs different in this regard from other chief officers, for example, in finance, HR, or marketing?

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Case Study Questions

After reading the case, what do you think are the most important competencies for the successful CIO of tomorrow?

– How do you rate yourself in those?

– Had you considered the importance of these skills and abilities before?

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Case Study Questions

How can CIOs prepare their successors for an uncertain future that will most likely require skills different from those possessed by successful CIOs today?

– Which key competencies are enduring, and which are a function of the current technological environment?

– How can CIOs prepare for the latter?

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Components of IT Management

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The Business/IT Planning Process

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The Business/IT Planning Process

Major components of business/IT planning

Strategic development

Resource management

Technology architecture

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Information Technology Architecture

The IT architecture isa conceptual design that

includes these major

components

Technology platform

Data resources

Application architecture

IT organization

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Managing the IT Function

Companies have essential applications on their intranets, without which they cannot function

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

The Internet boom inspired businesses to connect their networks

Three things recently happened

Created an urgent need for centralization

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Organizing IT

Early Years

Centralization of computing with large mainframes

Next

Downsizing and moving back to decentralization

Current

Centralized control over the mgmt of IT

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

Systemsanalysis& design

Systemmaintenance

Qualityassurance

Projectmanagement

Applicationsprogramming

Prototyping

Applicationdevelopment

involves…

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Managing IS Operations

IS operations management

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

Operational activities that must be managed– Computer system operations– Network management– Production control– Production support

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System Performance Monitors

Software packages that…

Monitor computer job

processing

Optimizecomputer system

performance

Facilitatecapacity planning

and control

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Features of System Performance Monitors

Chargeback Systems

Chargeback Systems

Allocates costs to users based on the information

service rendered

Allocates costs to users based on the information

service rendered

Process Control Capabilities

Process Control Capabilities

Systems that monitor and

automatically control computer

operations at large data centers

Systems that monitor and

automatically control computer

operations at large data centers

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IT Staff Planning

Evaluating employeesand rewarding good job performance with salary increases, promotions

Evaluating employeesand rewarding good job performance with salary increases, promotions

Designingcareer pathsDesigning

career pathsSetting salary

and wage levelsSetting salary

and wage levels

Recruiting, training, and retaining

qualified IS personnel

Recruiting, training, and retaining

qualified IS personnel

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IT Executives

Chief Information Officer (CIO)

Chief Technology Officer (CTO)

Oversees all uses of IT

Aligns IT with strategicbusiness goals

Second in command

Manages the IT platform

In charge of all IT planning/deployment

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Other IT Positions

Systemsanalyst

E-commercearchitect

ChiefSecurity Officer

Technicalteam leader

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Technology Management

All IT technologies must be used as a technology platform for integrating business applications– Both internally or externally focused– Includes Internet, intranets, electronic

commerce, 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 computing– Can be done with information centers

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

Key roles– Troubleshooting problems– Gathering and communicating information– Coordinating educational efforts– Helping with end-user application development

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Outsourcing

The purchase of goods or servicesfrom third-party partners

that were previously provided internally

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Why Companies Outsource

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Offshoring

This location is typically overseas

Can be either production or service

Relocation of an organization’s business processes to a lower-cost location

Digitization of many services

Availability of large amounts of reliable and affordable communication infrastructure

Growth of services offshoring linked to…

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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 efficiently Poorly managed application

development

Poor response times

Frequent downtime

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Management Involvement & Governance

Managerial and end user involvement– Key ingredient to high-quality information

system performance

– Optimizes business value of IT

Governance structures– Steering committees, executive councils

– Encourages active participation in planning and controlling business uses of IT

– Helps avoid post-development problems

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Sr. Management’s Involvement in IT

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IT Governance Approaches

Control Objectives for Information and Technology (COBIT)– Framework for IT management – Set of generally accepted measures,

indicators, processes, and best practices

Covers four domains– Planning and organization– Acquisition and implementation– Delivery and support– Monitoring

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COBIT in Action

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The International Dimension

Companies around the world are developing newmodels to operate competitively in a digital economy

These models are structured, yet agile,

global, yet local

Concentrates on maximizing risk-adjusted

return from both knowledge and technology assets

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Case 2: Reinsurance Group of America, Fronterrra

Consistency across the different business functions, countries, languages, and processes in worldwide implementations is one of the most important challenges faced by global organizations today

Reinsurance Group of America had to develop a single system to manage reinsurance business processes for numerous offices around the world

– Staffs spoke different languages, in different time zones, and some were set in their way of managing the business

Developing this system resulted in ROI of 15%, which was better than expected

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Case Study Questions

What is the business value of these global system developments for the companies mentioned in the case?

– How did they achieve these benefits? – What were the major obstacles they had to

overcome?

What are the advantages and disadvantages of a full-blown versus a phased approach for system implementations in general, and global ones in particular?

– How do you decide which road to take?

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Case Study Questions

How important is that all units in global organization speak the same business language, and use the same functions and business processes?

– How do you balance the competing needs for flexibility and consistency across operations?

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Global IT Management Dimensions

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Global IT Management Challenges

Political ChallengesPolitical 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

Geo-economic Challenges

Physical distances still a major problem

Takes too long to fly in specialists

Hard to communicate in real time across time zones

Poor telephone and telecommunications services

May be hard to find skilled local workers

Differences in the cost of living and labor costs

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Global IT Management Challenges

Cultural Challenges

Language and cultural interests

Religions and customs

Political philosophies

Cultural training needed before assignments

Work styles and business relationships

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Transnational Strategies

Business depends heavily on information systems and Internet technologies to help

integrate global business activities

This requires an integrated andcooperative worldwide IT platform

Companies are moving towarda transnational strategy

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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– Customers– Products– Operations– Resources– Collaboration

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Global IT Platforms

Hardware Difficulties

Import restrictions

Import restrictionsHigh pricesHigh prices High tariffsHigh tariffs

Lack of “localized”

documentation

Lack of “localized”

documentation

Long lead times for

government approvals

Long lead times for

government approvals

No local service or

spare parts

No local service or

spare parts

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Global IT Platforms

Software Difficulties

Software publisher may refuse to supply markets that disregard software licensing and copyright

agreements

Software publisher may refuse to supply markets that disregard software licensing and copyright

agreements

Packages developed in Europe may be

incompatible with American or Asian

versions

Packages developed in Europe may be

incompatible with American or Asian

versions

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International Data Communications Issues

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The Internet as a Global IT Platform

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

Business environment free of traditional boundaries and limits

The Internet

Expand markets

Reduce communications and distribution costs

Without incurring massive cost outlays for telecommunications, companies can…

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?

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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 Flows may be seen as violating

A nation’s sovereignty because it avoids customs duties and regulations

Laws protecting the localIT industry from competition

Laws protecting local jobs

Privacy legislation

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U.S.-E.U. Data Privacy Requirements

Key Data Privacy Provisions

Notice of purpose and use of data collected

Notice of purpose and use of data collected

Ability to opt out of third-party distribution of data

Ability to opt out of third-party distribution of data

Access for consumers to their information

Access for consumers to their information

Adequate security, data integrity, and

enforcement provisions

Adequate 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 relates to– Controlling the conduits– Filtering the flows– Punishing the purveyors

Most of the world has decided that restricting Internet access is not a viable policy– Restricting 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,

Uzbekistan

Government Filtered Access– Belarus, Cuba, Iraq, Tunisia, Sierra Leone,

Tajikistan, Turkmenistan, Vietnam

No Public Access Allowed– Burma, Libya, North Korea

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Global Systems Development

Key Development Issues

Local versus global system requirements

Getting agreement on system features

Global standardization of data definitions

Disturbances caused by systemsimplementation and maintenance activities

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Global Systems Development

Key development strategies – Transform an application used by the home

office or a subsidiary into a global application– Set up a multinational development team– Parallel development– Centers of excellence– Offshore development

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Internet-Enabled IT Development

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Case 3: IBM Corporation

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

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Case 4: IBM Corporation

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?

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Case Study Questions

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?