16.1 © 2006 by Prentice Hall 16 Chapter Managing International Information Systems

16.2 © 2006 by Prentice Hall Challenge: Fulfill customer orders made to a network of forty subsidiaries in Europe, Asia, and North America whose systems could not share data with one another Solutions: develop a single corporate database and use middleware with standard interfaces to connect all the subsidiary’s systems Develop a single worldwide data model with standard definitions and codes Illustrates the role of systems in an international environment for reducing inventory and business process costs worldwide. Management Information Systems Chapter 16 Managing International Information Systems Drager Safety AG Case

16.3 © 2006 by Prentice Hall The basic information systems required by organizations to coordinate worldwide trade and other activities Developing an International Information Systems Architecture International information systems architecture: Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS A force in the environment to which businesses must respond and that influences the direction of the business Business driver:

16.4 © 2006 by Prentice Hall International Information Systems Architecture Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS Figure 16-2

16.5 © 2006 by Prentice Hall The Global Environment: Business Drivers and Challenges The global business drivers can be divided into two groups: Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS Global communication and transportation technologies Development of global culture General cultural factors: Table 16-1

16.6 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS Emergence of global social norms Political stability Global knowledge base Table 16-1 (Continued) General Cultural Factors: (Continued)

16.7 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS Global markets Global production and operations Global coordination Global workforce Global economies of scale Specific business factors: Table 16-1 (Continued)

16.8 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS Business Challenges Cultural particularism: Regionalism, nationalism, language differences Social expectations: Brand-name expectations, work hours Political laws: Transborder data and privacy laws, commercial regulations General: Table 16-2

16.9 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS 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 Specific: Table 16-2 (Continued)

16.10 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems ORGANIZING INTERNATIONAL INFORMATION SYSTEMS Three kinds of organizational structure: Centralized (in the home country) Decentralized (to local foreign units) Coordinated (all units participate as equals) Global Strategies and Business Organization

16.11 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems ORGANIZING INTERNATIONAL INFORMATION SYSTEMS Heavy centralization of corporate activities in the home country of origin Domestic exporter strategy: Centralized financial management and control while decentralizing production, sales, and marketing operations to units in other countries Multinational strategy:

16.12 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems ORGANIZING INTERNATIONAL INFORMATION SYSTEMS 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. Franchisers: The value-adding activities are managed from a global perspective without reference to national borders, optimizing sources of supply and demand wherever they appear, and taking advantage of any local competitive advantages. Transnational strategy:

16.13 © 2006 by Prentice Hall Global Systems to Fit the Strategy Global Strategy and Systems Configurations Management Information Systems Chapter 16 Managing International Information Systems ORGANIZING INTERNATIONAL INFORMATION SYSTEMS Figure 16-3

16.14 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems 1.Centralized systems: Systems development and operation occur totally at the domestic home base. 2.Duplicated systems: Development occurs at the home base but operations are handed over to autonomous units in foreign locations. Four types of systems configuration: ORGANIZING INTERNATIONAL INFORMATION SYSTEMS

16.15 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems 3. Decentralized systems: Each foreign unit designs its own unique solutions and systems. 4. Networked systems: Systems development and operations occur in an integrated and coordinated fashion across all units. ORGANIZING INTERNATIONAL INFORMATION SYSTEMS Four types of systems configuration: (Continued)

16.16 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems ORGANIZING INTERNATIONAL INFORMATION SYSTEMS Organize value-adding activities along lines of comparative advantage Develop and operate systems units at each level of corporate activity —regional, national, and international Establish at world headquarters Reorganizing the Business To develop a global company and information systems support structure:

16.17 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems MANAGING 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 Management Challenges in Developing Global Systems Table 16-4

16.18 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems MANAGING GLOBAL SYSTEMS Define the core business processes: Conduct workflow analysis, identify centers of excellence for these 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 Make the Benefits Clear Global Systems Strategy

16.19 © 2006 by Prentice Hall Local, Regional, and Global Systems Management Information Systems Chapter 16 Managing International Information Systems MANAGING GLOBAL SYSTEMS Figure 16-4 Source: Adapted from Managing Information Technology in Multinational Corporations by Edard M. roche, copyright 1993.

16.20 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS 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

16.21 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Overcoming disparate national technical standards, data exchange restrictions and service levels User of Internet technology to create global intranets, extranets, virtual private networks (VPNs) Connectivity: Technology Challenges of Global Systems (Continued)

16.22 © 2006 by Prentice Hall Internet Population in Selected Countries Management Information Systems Chapter 16 Managing International Information Systems Figure 16-5 TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Sources: CIA World Factbook 2003; Computer Industry Almanac; and accessed November 9, 2004www.cia.gov

16.23 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Cost of new interface designs Integrating new systems with old User interface design Differences in language and conventions Software: Unique challenges for application software:

16.24 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Outsourcing portions of new systems like development work or maintenance of existing systems to external vendors in another country Offshore software outsourcing: Managing Global Software Development

16.25 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Contract cost Vendor selection costs Transition management and knowledge transfer costs Domestic human resources costs Major cost components of offshore software development:

16.26 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Costs of improving software development processes Costs of adjusting to cultural differences Cost of managing an offshore contract Major cost components of offshore software development: (Continued)

16.27 © 2006 by Prentice Hall Total Cost of Outsourcing Management Information Systems Chapter 16 Managing International Information Systems TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS Figure 16-6

16.28 © 2006 by Prentice Hall 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

16.29 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems Finding the right global business strategy Difficulties of managing change in a multicultural firm Difficulties of achieving global connectivity and integration Management Challenges: MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS

16.30 © 2006 by Prentice Hall Management Information Systems Chapter 16 Managing International Information Systems Agreeing on common user requirements Introducing changes in business processes Coordinating applications development Coordinating software releases Encouraging local users to support global systems Solution Guidelines: MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS