1 Chapter Seventeen Emerging Best Practices in Global Systems Development

2 Agenda  Implications for companies going global  IT infrastructure required to support global operations  Operational tactics for implementing the predominant IT strategy  Strategies for successful global applications development  Changing role of IS

3 INTRO  Some expected economic benefits of globalization:  Economies of scale due to expanded markets for standardized products  Ability to locate value chain activities in locations offering strategic advantage  Diversification of demand in multiple markets stabilizes overall firm performance in the face of economic fluctuations in individual markets

4 DEFINITION  GOING GLOBAL Operating as a single, unified company worldwide, balancing resources across the entire organization to implement a structure to compete with other firms and maximize customer value

5 IMPACT OF COMPANIES’ GLOBALIZATION AND THE RAMIFICATIONS FOR IT  Globalization entails different structures, that affect the development, deployment, and maintenance of IS and related IT infrastructure  The role of IT in a globally operating company is a force for dissolving boundaries

6 DETERMING THE BEST GLOBAL STRUCTURE  PRESSURES DRIVING LOCALIZATION  Cultural and local subtleties exist within presumably homogeneous cultures  Local languages, local cultures, local taste, etc.  STATUS OF GLOBALIZATION  Differs in various parts of the world  Asia: Leapfrop computing  Europe: Strong ethnic identities

7 GLOBAL STRATEGIC STRUCTURES  MULTINATIONAL (Low, low) decentralized organizational structure  GLOBAL: (High, Low) centralized organizational structure  INTERNATIONAL (Low, High) coordinated-federation organizational structure  TRANSNATIONAL:(High, High) integrated-network organizational structure Pressure for Globalization Pressure for Localization

8 ALIGNMENT OF GLOBAL AND INFORMATION MANAGEMENT STRATEGIES Business Structure Coord’n & Control Strategy IS Structure MultinationalSocializationDecentralization Global Federation Centralization InternationalFormalizationLinking TransnationalCoOptingIntegration

9 FIVE TACTICS FOR IMPLEMENTING TRANSNATIONAL STRATEGY  Mass Customization (Eg. HP, Amazon.com)  Global Supply Chain Management (Eg. Benneton, Reebok)  Obtain materials from vendors as close as possible to the production site and establish global sourcing agreements guaranteeing material consistency and delivery schedules  Global Intelligence and Information Resources (Eg. Everyone)  Intranets, extranets  Global Customer Service (Eg. Amex)  Global databases, common customer codes, sales force automation  Global Alliances (Eg. IATP)  Aligning and sharing key resources is beneficial to each company: new markets, new skills, etc. ***tactics used in combination ***

10 Transnational Implementation Tactic Focus Mass customization Global Supply Chain Management Global Intelligence and Information Resources Global Customer Service Global Alliances Focus on the customer’s requirements Focus on the supplier and its relationship to the customer Focus on the traditional rivals and traditional competition Focus on quality in the hands of the customer; after sales service Focus on the industrial network, “precompetitive” conditions

11 OTHER, NON-TECHNOLOGY RELATED GLOBAL ISSUES  Sorting it out: Cultural, organizational, personal iisues  Rates of growth and change in markets and regions:Global positioning and capability  Mandates and Leadership: Forcing vs. developing a consensus.

12 FIVE STRATEGIES FOR SUCCESSFUL GLOBAL APPLICATIONS DEVELOPMENT  Mandate use of best-in firm application systems  One application that best fits the business experience of every unit  Use commercial off-the-shelf software packages  Use JAD to determine requirements, choose a vendor  Cross-boundary development teams  Team leader as dictator, build the application  Parallel development  Separate applications developed for each location, interconnections are established between them (intranets)  Utilizing software components for systems development  Object-oriented technology, common “components” and variations are incorporated to reflect local requirements

13 CHANGING ROLE OF IS  Going global demands  A shift from passive (order-takers) to active problem solvers (information sharers)  A shift from cost driven to business or customer value driven  A shift from independent support to intimate partner

14 Evolution of System Architectures Centralized – circa 1960 Distributed – circa 1980 Integrated – circa 2000 Centralized architectures enable tight control by the center Deentralized architectures enable independence of peripheral (local) IT groups to respond to local demands Integrated architectures enable virtual “center” to create global teams and projects while responding to local demands and needs yet working in concert with other localities

15 Evolution of Global Structures Multi- national Centralized 1960 Inter- national Global Distributed 1975 ? Trans- national ? Integrated 1990 ? ? ? 2005 ? ? 2020 Enabling information architectures Pressure (Response) towards Localization Low High Pressure (Response) towards Globalization Low High

16 SUMMARY  The different structure of global firms and the impact on the IT strategies used  Most firms with global objectives and operating models are moving over time towards the transnational model  Five tactics used to leverage IT for global purposes  Organizational issues play an even more important role in the successful implementation of global systems than systems delivery and implementation does