Chapter 14 Enterprise and Global Management of Information Technology James A. O'Brien, and George Marakas Management Information Systems, 9th ed.  Boston, MA: McGraw-Hill, Inc., 2009  ISBN: 13 9780073376769 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives Identify each of 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 Identify several cultural, political, and geo-economic challenges that confront managers in the management of global information technologies 14-2

Learning Objectives (cont’d) Explain the effect on global business/IT strategy of the trend toward a transnational business strategy by international business organizations 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 14-3

Managing Information Resource and Technology “In an increasingly competitive world, IT is critical to the development of effective operational and management processes. To serve customers well… companies need to be proficient in half a dozen key areas: reduced cycle times, reduced asset levels, faster development of new products, improved customer service, increasing empowerment of employees, and increased knowledge sharing and learning. Information technology is a critical resource for accomplishing all these goals”. - Harvard Business Review

Basic Components of an Organization: People Managers and knowledge workers are individuals with a variety of preferences for information and diverse capabilities for effectively using information provided to them

Tasks The tasks of many organization have become quite complex and inefficient over time. In many cases, IT has been used to do the same old thing, only faster. Technology The technology of computer systems continue to grow more sophisticated and complex. However, this should not dictate the information needs of end users in the performance of their organizational task.

Culture Organizations and their subunits have a culture that is shared by managers and their employees. That is they have a unique set of organizational values and styles. Organizations structure their management, employees, and job tasks into a variety of organizational subunits. However, information technology can also support a process of organizational redesign.

Organizations and IT: One way to understand the organizational impact of information technology is to view an organization as a Sociotechnical system. People, tasks, technology, culture, and structure are the basic components of an organization. This concept emphasizes that to improve an organization’s performance, managers must: Change one or more of these components Take into account the relationships among these interdependent components. This is especially important for the proper use of information technology.

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 There is a need for business managers and professionals to understand how to manage this vital organizational function 14-11

Case 1: Toyota, Procter & Gamble, Hess Corporation, and Others Today, the role of a CIO has become very strategic. Tomorrow’s CIOs will be even more involved in strategic thinking and influential in an organization. The skills needed to be a CIO has changed as their role has shifted from being a technologist to business strategist. Developing and mentoring their successors is one of the key responsibilities of IT leaders in an environment that includes the changing role of the CIO and a shortage of qualified managers. 14-12

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? 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? How can CIOs prepare their successors for an uncertain future that will most likely require skills different from those possessed by the successful CIOs of today? Which key competencies are enduring, and which ones are a function of the current technological environment? How can CIOs prepare for the latter? 14-13

Components of IT Management 14-14

Managing Information Technology Managing the joint development and implementation of business and IT strategies Use IT to support strategic business priorities Align IT with strategic business goals Managing the development and implementation of new business/IT applications and technologies Information systems development Managing the IT organization and infrastructure Hardware, software, databases, networks, and other resources 14-15

Managing the IT Function Three things happened in the past few years The Internet boom inspired businesses to connect their networks Companies on their intranets essential applications without which their businesses could not function It became apparent that maintaining PCs on a network is very, very expensive These things created an urgent need for centralization 14-16

Organizing IT Early Years Next Current Centralization of computing with large mainframes Next Downsizing and moving back to decentralization Current Centralized control over the management of IT while serving the strategic needs of business units Hybrid of centralized and decentralized components 14-17

Avnet Marshall Organizational Components 14-18

Managing Application Development Application development management involves Systems analysis and design Prototyping Applications programming Project management Quality assurance System maintenance 14-19

Managing IS Operations IS operations management is 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 14-20

System Performance Monitors Software packages that Monitor the processing of computer jobs Help develop a planned schedule of computer operations that can optimize computer system performance Product detailed statistics that are invaluable for effective planning and control of computing capacity 14-21

Features of System Performance Monitors Chargeback Systems Allocates costs to users based on the information service rendered Process Control Capabilities Systems that not only monitor but automatically control computer operations at large data centers 14-22

IT Staff Planning Recruiting, training and retaining qualified IS personnel Evaluating employee job performance and rewarding outstanding performance with salary increases and promotions Setting salary and wage levels Designing career paths 14-23

IT Executives Chief Information Officer (CIO) Oversees all uses of information technology in many companies, and brings them into alignment with strategic business goals Chief Technology Officer (CTO) In charge of all information technology planning and deployment Manages the IT platform Second in command 14-24

Other IT Positions E-commerce architect Technical team leader Practice manager Systems analyst 14-25

Technology Management All information technologies must be managed as a technology platform for integrating business applications Both internally or externally focused The Internet, intranets, electronic commerce and collaboration technologies, CRM software, enterprise resource planning, and supply chain management Often the primary responsibility of a chief technology officer 14-26

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 14-27

Outsourcing The purchase of goods or services from third-party partners that were previously provided internally 14-28

Outsourcing’s Top Ten 14-29

Why Outsource? Save money – achieve greater ROI Focus on core competencies – organizations can focus on the business that they are in Achieve flexible staffing levels Gain access to global resources Decrease time to market 14-30

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 is linked to Availability of large amounts of reliable and affordable communication infrastructure Digitization of many services 14-31

Failures in IT Management IT not used effectively Computerizing traditional business processes instead of developing innovative e-business processes IT not used efficiently Poor response times Frequent downtimes Poorly managed application development 14-32

Poor IS Performance: Well-known , Oft-repeated IT Pitfalls (drawback / problem): Botched (failed) development projects Escalating costs with no apparent economic benefit Organizational disruption (disorder) Technical glitches (error)

Management Involvement & Governance Managerial and end user involvement Key ingredient to high-quality information system performance Involve business managers in IT management Governance structures, such as steering committees 14-34

Sr. Management’s Involvement in IT 14-35

The International Dimension Companies around the world are developing new models to operate competitively in a digital economy These models are structured, yet agile, global, yet local They concentrate on maximizing the risk adjusted return from both knowledge and technology assets 14-36

Case 2: Reinsurance Group of America and Fronterrra Consistency across the different business functions, countries, languages and processes involved in worldwide implementations is one of the most important challenges faced by global organizations today. Reinsurance Group of America faced with a challenge in developing a single system that manages reinsurance business processes for numerous offices around the world—offices whose staffs speak different languages, are in different time zones, and just might be stuck in their ways as to how they manage their business. The result of developing this system resulted in a return on investment of 15% which was better than expected. 14-37

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 fullblown versus a phased approach for system implementations in general, and global ones in particular? How do you make the decision on which road to take? 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? 14-38

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