Managing International Information Systems Chapter 15 Managing International Information Systems

Compare strategies for developing global businesses Management Information Systems Chapter 16 Managing International Information Systems OBJECTIVES Identify the major factors driving the internationalization of business Compare strategies for developing global businesses Demonstrate how information systems can support different global business strategies

Management Information Systems Chapter 16 Managing International Information Systems OBJECTIVES (Continued) Evaluate the issues and technical alternatives to be considered when developing international information systems Identify the challenges posed by global information systems and management solutions

This chapter describes how to go about building an international information systems architecture suitable for your international strategy.

15.1 THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS Moving from decentralized structures to regional global structures. Localized firms to networked corporations The growth of international trade has radically altered domestic economies around the globe. Today,production and design of many high-end electronic products is parceled out to a number of different countries.

Global Product Development and Production Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS Global Product Development and Production Figure 16-1

You must have an information system in place that will support the communications, coordination of people and products, and order processing for both domestic and foreign markets (international information systems infrastructure) How do u Go about building an international information systems architecture suitable for your international strategy????

You have to understand the characteristics and individual needs of foreign markets, just as you need to understand your domestic markets. E.g Walmart learnt it the hard way.

Developing an International Information Systems Architecture Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS Developing an International Information Systems Architecture The basic information systems required by organizations to coordinate worldwide trade and other activities International information systems architecture: understand the global environment,including which business driver is most prominent Business driver: A force in the environment to which businesses must respond and that influences the direction of the business

International Information Systems Architecture /DIMENSIONS Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS International Information Systems Architecture /DIMENSIONS Understand the global environment in which the firm is operating. Understanding the market forces and business drivers. Corporate strategy How to structure ur organization. Management issues and business processes Technology platform. Figure 16-2 How will u sell to the globe e.g (domestic base etc)

The Global Environment: Business Drivers and Challenges Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS The Global Environment: Business Drivers and Challenges The global business drivers can be divided into two groups and are leading to global markets. General cultural factors: Global communication and transportation technologies ( created a global village,cost of moving goods have fallen) Development of global culture (television,internet now permits different cultures and ppl to develop common expectations). Table 16-1

General Cultural Factors: (Continued) Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS General Cultural Factors: (Continued) Emergence of global social norms Political stability Global knowledge base(widely despersed knowledge base) Table 16-1 (Continued)

Global production and operations Global coordination Global workforce Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS General factors lead towards Specific business factors that affect most industries: Global markets(global consumers interested in consuming similar products that are culturally approved. American sneakers (made in Korea but designed in Los Angeles) Global production and operations Global coordination Global workforce Global economies of scale (production done where it can be best accomplished) Table 16-1 (Continued)

Business Challenges inhibit international business Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS Business Challenges inhibit international business General: Cultural particularism: Regionalism, nationalism, language differences rejects the concept of a shared global culture) Social expectations: Brand-name expectations, work hours( diffrences among cultures produce differences in social expectations) Political laws: Transborder data and privacy laws, commercial regulations Table 16-2

Specific business challenges: Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS Specific business challenges: Standards: Different Electronic Data Interchange (EDI), telecommunications standards Reliability: Phone networks not uniformly reliable Speed: Different data transfer speeds, many slower than United States Personnel: Shortages of skilled consultants Table 16-2 (Continued)

As it turns out there are significant difficulties in building appropriate international architectures.

Organizing international information system First you have to decide what you're going to do — you have to choose a strategy. Then you have to organize your business around this strategy. The last step is to build the system that will incorporate the first two.

Global Strategies and Business Organization Management Information Systems Chapter 16 Managing International Information Systems ORGANIZING INTERNATIONAL INFORMATION SYSTEMS Global Strategies and Business Organization Three kinds of organizational structure: Centralized (in the home country) Decentralized (to local foreign units) Coordinated (all units participate as equals)

Domestic exporter strategy: Management Information Systems Chapter 16 Managing International Information Systems ORGANIZING INTERNATIONAL INFORMATION SYSTEMS Domestic exporter strategy: Heavy centralization of corporate activities in the home country of origin. International sales/marketing are sometimes dispersed (e.g:Caterpillar Corporation) Multinational strategy: Centralized financial management and control,management and HR. decentralizing production, sales, and marketing operations to units in other countries Products are adapted to suit local markets Decentralized systems can lead to disorganization on a global scale. (e.g:General Motors and Intel)

Transnational strategy: Management Information Systems Chapter 16 Managing International Information Systems ORGANIZING INTERNATIONAL INFORMATION SYSTEMS Franchisers: Product designed in home country finished in local country The product is financed and initially produced in the home country, but for product-specific reasons rely on foreign personnel for further production, marketing, and human resources. E.g KFC,Mc Donalds,Starbucks coffee. Transnational strategy: Truly Global Firm; No National Headquarters; Value-added Activities Managed From Global Perspective; Optimizes Supply & Demand, Taking Advantage of Local Competitive Strengths.One globe one company e.g citi corp

Once you've decided which global business strategy to follow, it's time to decide how your information system will support it.

Four types of systems configuration: Management Information Systems Chapter 16 Managing International Information Systems ORGANIZING INTERNATIONAL INFORMATION SYSTEMS Four types of systems configuration: Centralized systems: Systems development and operation occur totally at the domestic home base. Duplicated systems: Development occurs at the home base but operations are handed over to autonomous units in foreign locations.

Four types of systems configuration: (Continued) Management Information Systems Chapter 16 Managing International Information Systems ORGANIZING INTERNATIONAL INFORMATION SYSTEMS Four types of systems configuration: (Continued) Decentralized systems: Each foreign unit designs its own unique solutions and systems.Each business unit has its own systems. Decentralized systems can lead to disorganization on a global scale.e.g in book 4. Networked systems: Systems development and operations occur in an integrated and coordinated fashion across all units.

Global Systems to Fit the Strategy Management Information Systems Chapter 16 Managing International Information Systems ORGANIZING INTERNATIONAL INFORMATION SYSTEMS Global Systems to Fit the Strategy Global Strategy and Systems Configurations Figure 16-3

Reorganizing the Business Management Information Systems Chapter 16 Managing International Information Systems ORGANIZING INTERNATIONAL INFORMATION SYSTEMS Reorganizing the Business To develop a global company and information systems support structure: Organize value-adding activities along lines of comparative advantage. For instance departments located where they can best perform Develop and operate systems units at each level of corporate activity —regional, national, and international Establish at world headquarters, A global chief information officer position .Total integration of all local, regional and global systems

Management Challenges in Developing Global Systems Management Information Systems Chapter 16 Managing International Information Systems MANAGING GLOBAL SYSTEMS Management Challenges in Developing Global Systems Agreeing on common user requirements Introducing changes in business processes Coordinating applications development Coordinating software releases Encouraging local users to support global systems Table 16-4

A typical scenario disorganization on a global scale E.G of a MNc based in U.S and operates in Europe would like to expand into Asian markets Knows it must develop a transnational strategy

Global Systems Strategy Management Information Systems Chapter 16 Managing International Information Systems MANAGING GLOBAL SYSTEMS Global Systems Strategy Solution Define the core business processes: Conduct workflow analysis, identify centers of excellence for these processes. Short list business processes. Identify the core systems to coordinate centrally: Conquer the core systems and define these systems as truly transnational Choose an approach: Incremental, Grand Design, Evolutionary.Pick up most critical areas to merge first. Make the Benefits Clear:

Local, Regional, and Global Systems Management Information Systems Chapter 16 Managing International Information Systems MANAGING GLOBAL SYSTEMS Local, Regional, and Global Systems Figure 16-4 Source: Adapted from Managing Information Technology in Multinational Corporations by Edard M. roche, copyright 1993.

Technology Challenges of Global Systems Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Technology Challenges of Global Systems Computing platforms and systems integration: Develop global, distributed, and integrated systems to support digital business processes spanning national boundaries Use of same hardware and operating system does not guarantee integration. Establish data and technical standards

Technology Challenges of Global Systems (Continued) Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Technology Challenges of Global Systems (Continued) Connectivity: Overcoming disparate national technical standards, data exchange restrictions and service levels User of Internet technology to create global intranets, extranets, virtual private networks (VPNs)

Internet Population in Selected Countries Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Internet Population in Selected Countries Figure 16-5 Sources: CIA World Factbook 2003; Computer Industry Almanac; and www.cia.gov, accessed November 9, 2004

Unique challenges for application software: Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Software: Unique challenges for application software: Cost of new interface designs Integrating new systems with old User interface design Differences in language and conventions

Managing Global Software Development Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Managing Global Software Development Offshore software outsourcing: Outsourcing portions of new systems like development work or maintenance of existing systems to external vendors in another country

Major cost components of offshore software development: Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Major cost components of offshore software development: Contract cost Vendor selection costs Transition management and knowledge transfer costs Domestic human resources costs

Major cost components of offshore software development: (Continued) Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Major cost components of offshore software development: (Continued) Costs of improving software development processes Costs of adjusting to cultural differences Cost of managing an offshore contract

Total Cost of Outsourcing Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Total Cost of Outsourcing Figure 16-6

Management Opportunities: Management Information Systems Chapter 16 Managing International Information Systems MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS Management Opportunities: Ability to lower costs through global scale economies by building international systems for producing and selling goods and services in different regions of the world

Management Challenges: Management Information Systems Chapter 16 Managing International Information Systems MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS Management Challenges: Finding the right global business strategy Difficulties of managing change in a multicultural firm Difficulties of achieving global connectivity and integration

Agreeing on common user requirements Management Information Systems Chapter 16 Managing International Information Systems MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS Solution Guidelines: Agreeing on common user requirements Introducing changes in business processes Coordinating applications development Coordinating software releases Encouraging local users to support global systems