MIS CHAPTER 9 GLOBAL INFORMATION SYSTEMS Hossein BIDGOLI

Chapter 9 Global Information Systems l e a r n i n g o u t c o m e s LO1 Discuss reasons for globalization and for using global information systems, including e-business and Internet growth. LO2 Describe global information systems and their requirements and components. LO3 Explain the types of organizational structure used with global information systems. LO4 Discuss obstacles to using global information systems.

Why Go Global? Customers demand integrated worldwide services Example: shoe company Produces leather and uppers in Italy Upper shipped to China Tested in Ireland Sold in United States Supply chain logistics managed and coordinated in US

Why Go Global? (cont’d.) 2010 Coca-Cola Company Generated more than 75% of its revenue from outside United States Prerequisites to the success of a global information system: Clear understanding of factors such as customs, laws, technological issues, and local business needs and practices

Why Go Global? (cont’d.) Airline reservation systems Global products First large-scale interactive global system Global products Products or services that have been standardized for all markets Manufacturer might “regionalize” operations Globalization Important factor in purchasing and supply chain

Global Information Systems at Rohm & Haas Part of Dow Chemical Production units in many countries Overhauled its global information system By upgrading the order entry system Installed a company-wide materials management system tied in with a global demand planning system Can now provide better service to its customers

E-Business: A Driving Force Major factor in the widespread use of global information systems Builds on the advantages and structures of traditional business The Internet Simplify communication Improve business relationships Consumers can engage in comparison shopping more easily

E-Business: A Driving Force (cont’d.) Small companies can conduct business on-line just as large companies

Growth of the Internet Part of daily life in most parts of the world 2000-2011: highest growth has occurred in the Middle East; the lowest in North America “Localization of a Web site” Making a company Web site global Language, font, cultural differences, currency, date format, spare use of graphics and flash features, e-mail, payments, international logistics, listing, marketing, and local involvement

Global Information Systems: An Overview Global information system (GIS) Information system that works across national borders Facilitates communication between headquarters and subsidiaries in other countries Incorporates all the technologies and applications found in a typical information system Stores, manipulates, and transmits data across cultural and geographic boundaries

Global Information Systems: An Overview (cont’d.) International company Can increase control and enhance coordination of its subsidiaries and be able to access new global markets Strategic planning is a core function Defined in terms of two dimensions: Control and coordination

Global Information Systems: An Overview (cont’d.) Control requires: Centralized architecture for data; standardized definitions used across the organization Standard formats for reports Defined behaviors for different processes Performance-tracking system

Global Information Systems: An Overview (cont’d.) Coordination requires: Decentralized architecture for data Standardization within departments Ability to communicate these standards to other departments Collaboration systems Technologies that support informal communication and socialization Many advantages of high coordination

Components of a Global Information System GIS can vary quite a bit depending on a company’s size and business needs Basic components: Global database Designing and implementing is a technical challenge Information-sharing technologies Large versus small companies: Custom applications or outsourcing

Components of a Global Information System (cont’d.) Information system manager Faces design and implementation issues when developing a global network Determine the best communication media to meet global performance and traffic needs Choose the best transmission technology for the global network’s needs Consider the company’s objectives when determining the network architecture Keep in mind that standardized software and hardware are always ideal but not always feasible

Components of a Global Information System (cont’d.) Transborder data flow (TDF) Restricts what type of data can be captured and transmitted

Requirements of Global Information Systems Must be capable of supporting complex global decisions Multinational corporations (MNCs) environment includes many variations in different forces Legal Cultural Economic Political

Requirements of Global Information Systems (cont’d.) Operational requirements: Global data access Consolidated global reporting Communication between headquarters and subsidiaries Management of short-term foreign exchange risks Strategic requirements: Strategic planning support Management of global tax risks

Implementation of Global Information Systems Implementing a GIS is difficult Countries differ in culture, politics, social and economic infrastructures, and business methods Issues: Identify business opportunities in global marketplace Justify investment in GIS Personnel must have technical and business expertise Coordinate migration carefully Using information systems on a global scale is more challenging than doing so on a local scale

Organizational Structures and Global Information Systems Four commonly accepted types of global organizations: Multinational Global International Transnational

Multinational Structure Production, sales, and marketing are decentralized Financial management remains the parent company’s responsibility Tyco Corporation Focus on local responsiveness Nestle Reduces the need for communication between subsidiaries and headquarter Each subsidiary operates on a different platform

Exhibit 9.1 A Multinational Structure

Global Structure Highly centralized information system Subsidiaries have little autonomy Sometimes called a “franchiser” Extensive communication network necessary Integration needed to manage production, marketing, and human resources is difficult Heavy reliance on headquarters McDonald’s, Mrs. Fields’ Cookies, and Kentucky Fried Chicken

Exhibit 9.2 A Global Structure

International Structure Operates much like a multinational corporation However, subsidiaries depend on headquarters more for process and production decisions Information systems personnel are regularly exchanged among locations Encourages a cooperative culture in geographically dispersed personnel Example: Caterpillar Corporation

Exhibit 9.3 An International Structure

Transnational Structure Parent and all subsidiaries work together in designing policies, procedures, and logistics Usually focuses on optimizing supply sources and using advantages available in subsidiary locations Architecture requires a higher level of standardization and uniformity for global efficiency However, must maintain local responsiveness Examples: Citigroup, Sony, and Ford

Exhibit 9.4 A Transnational Structure

Global Information Systems Supporting Offshore Outsourcing Alternative for developing information systems Organization chooses an outsourcing firm in another country Used for many information technology tasks GIS plays an important role in supporting offshore outsourcing

Table 9.1 Top Offshoring Countries in 2008

Obstacles to Using Global Information Systems Lack of standardization Including differences in time zones, taxes, language, and work habits, etc. Cultural differences Diverse regulatory practices Poor telecommunication infrastructures Lack of skilled analysts and programmers

Lack of Standardization Impedes the development of a cohesive GIS that is capable of sharing information resources across borders Too much standardization can prevent flexibility in responding to local preferences and even time differences Only 5% to 15% of a company’s applications are truly global in nature

Cultural Differences Differences in values, attitudes, and behaviors Views on using technology Cultural issues Best addressed with education and training

Diverse Regulatory Practices Applies to policies on business practices and technological use Many countries restrict the type of hardware and software Jurisdiction issues on contents of a GIS Nature of intellectual property laws Software piracy Privacy and cybercrime laws Censorship and government control

Poor Telecommunication Infrastructures Consider telecommunication infrastructures of the countries where subsidiaries are located Differences in telecommunication systems make consolidating them difficult Differences in standards

Lack of Skilled Analysts and Programmers Severe shortage of qualified information systems professionals in the United States and Western Europe Companies must consider the nature of each culture and differences in skills in other countries Training and certification programs

Summary Factors contributing to the globalization trend Global information systems Components Requirements Uses in multinational structures Applications Obstacles