Chapter 12

Enterprise and Global

Management of Information
Technology

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

As the 21st century unfolds, many companies are

transforming themselves into global powerhouses
via major investments in…

Global e-business

E-commerce

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 Technology
development architecture
Resource
management

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Information Technology Architecture

The IT Technology platform

architecture is
a conceptual Data resources
design that
includes these Application architecture
major
components IT organization

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 Managing the IT Function

Three things recently happened

The Internet boom inspired businesses

to connect their networks

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

Created an urgent need for centralization

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 Organizing IT

Early Years Next Current

Centralization Downsizing and Centralized

of computing moving back to control over the
with large decentralization mgmt of IT
mainframes 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

Systems
analysis
& design
System Prototyping
maintenance
Application
development
involves…
Quality Applications
assurance programming
Project
management

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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…

Optimize
computer system
performance
Monitor Facilitate
computer job capacity planning
processing and control

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Features of System Performance Monitors

Chargeback
Chargeback Process
Process Control
Control
Systems
Systems Capabilities
Capabilities
Allocates
Allocates costs
costs to
to Systems
Systems that
that
users
users based
based on
on monitor
monitor and
and
the
the information
information automatically
automatically
service
service rendered
rendered control
control computer
computer
operations
operations at
at large
large
data
data centers
centers

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 IT Staff Planning

Evaluating
Evaluating employees
employees
Recruiting,
Recruiting, training,
training, and
and rewarding
rewarding good
good job
job
and
and retaining
retaining performance
performance with
with salary
salary
qualified
qualified IS
IS personnel
personnel increases,
increases, promotions
promotions

Setting
Setting salary
salary Designing
Designing
and
and wage
wage levels
levels career
career paths
paths

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 IT Executives

Oversees all uses of IT

Chief Information
Officer (CIO) Aligns IT with strategic
business goals

In charge of all IT
planning/deployment

Chief Technology Manages the IT platform

Officer (CTO)
Second in command

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 Other IT Positions

E-commerce Technical
architect team leader

Systems Chief
analyst Security Officer

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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 services

from third-party partners
that were previously provided internally
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Why Companies Outsource

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 Offshoring

Relocation of an organization’s business processes

to a lower-cost location

This location is typically overseas

Can be either production or service

Growth of services offshoring linked to…

Digitization of many services

Availability of large amounts of reliable and

affordable communication infrastructure

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 Failures in IT Management

IT not used Computerizing traditional business

effectively processes instead of developing
innovative e-business processes

Poor response times

Frequent downtime
IT not used
efficiently Poorly managed application
development

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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 new

models to operate competitively in a digital economy

Concentrates on
These models are
maximizing risk-adjusted
structured, yet agile,
return from both knowledge
global, yet local
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
Political Challenges
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

Companies are moving toward

a transnational strategy

Business depends heavily on information

systems and Internet technologies to help
integrate global business activities

This 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

– Customers
– Products
– Operations
– Resources
– Collaboration

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 Global IT Platforms

Hardware Difficulties

Import
Import
High
Highprices
prices High
Hightariffs
tariffs restrictions
restrictions

Long
Longlead
lead No
Nolocal
local Lack
Lackofof
times
timesfor
for service
serviceor
or “localized”
“localized”
government
government spare
spareparts
parts documentation
documentation
approvals
approvals

12-45
 Global IT Platforms

Software Difficulties

Packages
Packagesdeveloped
developedinin Software
Softwarepublisher
publishermay
may
Europe
Europemay
maybebe refuse
refusetotosupply
supplymarkets
markets
incompatible
incompatiblewith
with that
thatdisregard
disregardsoftware
software
American
Americanor orAsian
Asian licensing
licensingand
andcopyright
copyright
versions
versions agreements
agreements

12-46
International Data Communications Issues

12-47
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 free of
traditional boundaries and limits

Without incurring massive cost outlays for

telecommunications, companies can…
Expand markets

Reduce 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?

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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 local
IT industry from competition

Laws protecting local jobs

Privacy legislation

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

Key Data Privacy Provisions

Noticeof
Notice ofpurpose
purposeand
and Abilityto
Ability toopt
optout
outof
ofthird-
third-
useof
use ofdata
datacollected
collected partydistribution
party distributionof
ofdata
data

Adequatesecurity,
Adequate security,data
data
Accessfor
Access forconsumers
consumers
integrity,and
integrity, and
totheir
to theirinformation
information
enforcementprovisions
enforcement provisions

12-53
 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 systems
implementation 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?

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