Enterprise and Global Management of e-Business Technology Chapter 1 Enterprise and Global Management of e-Business Technology © 2002 McGraw-Hill Companies

Chapter 1 Chapter Objectives Identify several ways that information technologies have affected the job of managers in e-business companies. Explain how problems of information system performance can be reduced by the involvement of business managers in IS planning and management. Identify the seven major dimensions of the e- business organization and explain how they affect the success of e-business companies. © 2002 McGraw-Hill Companies

Chapter 1 Chapter Objectives Identify each of the three components of e- business technology management and use examples to illustrate how they might be implemented in e-business enterprise. Identify several cultural, political, and geoeconomic challenges that confront managers in the management of global e- business technologies. © 2002 McGraw-Hill Companies

Chapter 1 Chapter Objectives Explain the effect on global e-business 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 e-business enterprise. © 2002 McGraw-Hill Companies

Managing e-Business Technologies Chapter 1 Managing e-Business Technologies E-Business Agility, Flexibility Business Strategies Supply Chain Total Quality Suppliers Business Partners Customer Value Responsiveness Accountability Lower costs Information Technology Developments Global and enterprise computing; intranets IT infrastructure The global e-business confronts constant and changing competitive pressures. Today’s customer-centric business requires both agility and flexibility. Meeting customer and business value objectives has resulted in increased business IT investments in information systems. Managers must understand and select the appropriate technologies that are consistent with business strategies. Thus, there is a real need for business managers and professionals to understand how to manage the IS organization function. More importantly, the enabling technology of IT systems require a reconsideration of what it means to manage, of identifying what skills are required so as to allow information workers the infrastructure they need to do the jobs they know better than do their managers. Yet IT doesn't just happen. IT systems don't create, maintain, or improve themselves. They must be managed -- understood and deployed in pursuit of strategic goals. What managers do may change, but on the most abstract level, management remains the process of coordinating the resources of the firm to meet the competitive opportunities and challenges of the marketplace. In this chapter we will examine how IT affects managers, and the e-business organization. We will further examine the management challenges and opportunities confronting the global e-business manager today. Teaching Tips This slide corresponds to Figure 12.2 on pp. 418 and relates to the material on pp. 418-421. © 2002 McGraw-Hill Companies

The e-Business Organization Chapter 1 The e-Business Organization Business Quality Business Traditional Organization E-Organization Improvement Reengineering Organization Structure Hierarchical Horizontal, networked Incrementally Improving Radically Redesigning Existing Processes Existing Processes Business Systems Business Systems Leadership Centralized focus Everyone is a leader Any Process Strategic Business People and Culture Target Vertical decision making Individuals rewarded Delegated authority Collaboration rewarded Processes Processes Potential 10%-50% Improvements 10%-50% Improvements 10-Fold Improvements 10-Fold Improvements Coherence Internal relevance Customer relevance Payback Knowledge Institutional It goes without saying that successful information system performance requires the involvement of both managers and users in IS governance. Management must do more than simply endorse the IS design and improve its implementation; it must take an active role in maintaining and controlling the IS business function at all levels of interaction. However, management involvement is only the first step. e-business companies are recognizing the need to ‘e-engineer’ their organizational structure and roles, as well as their business processes, as a means for becoming customer-focused. As indicated on the slide, the new e-business organization differs from traditional organizations along seven dimensions. Key characteristics of the internetworked e-business include: Horizontal organization structure. New businesses rely on their ability to quickly respond to market changes. The slow top-down communication structure of hierarchical organizations makes this difficult to do. Decentralized Leadership. In a customer-centric organization, delegated authority is more effective and efficient than centralized control. Collaborative Teamwork. Collaborative efforts are regarded more highly than individual efforts. Customer-Focus. The focus is completely on getting and maintaining valuable customers. Shared Knowledge. Company knowledge is available to everyone in the organization, not just a few. Cooperation. Strategic alliances with both competitors and suppliers are used to meet changing market demands. Teaching Tips This slide corresponds to Figure 12.4 on pp. 421 and relates to the material on pp. 421-423. Individualistic Low Low High High Risk Ally with distant partners Complement current gaps Ally with competitors, customers and suppliers Create new value Alliances IT and Organizational Same Jobs - More Efficient Same Jobs - More Efficient Big Job Cuts; New Jobs; Big Job Cuts; New Jobs; What Changes? Primary IT and Work Simplification Major Job Redesign Major Job Redesign Governance Top-down Distributed © 2002 McGraw-Hill Companies

Example of organizational structure of an e-business enterprise Chapter 1 Example of organizational structure of an e-business enterprise Consumer Products Business Unit E-commerce Business Unit Shared IT Support Services Business Unit Industrial Products Business Unit Global Executive Core This is a good slide to start up discussions with students on how organizations are restructuring. This slide is an example of the e-organization structure of an e-business company. Stress with students: That there is a global executive core, four market-focused business units, and two-shared support services business units. However, all six business units are customer focused. Even the shared support services units must provide competitive services to the global core, other business units, and external customers, since uncompetitive services may be outsourced to external vendors. Teaching Tips This slide corresponds to Figure 9.12.5 on pp. 423 and relates to the material on pp. 423-424. Financial Services Business Unit Shared Administrative Support Services Business Unit © 2002 McGraw-Hill Companies

e-Business Technology Management Chapter 1 e-Business Technology Management e-Business Technology Management Managing e-Business IT Strategy Managing Application Development & Technology Managing the IT Organization The e-business approach to managing information technology in the internetworked e-business enterprise has three major components: Managing the joint development and implementation of e-business and IT strategies. Managing the development of e-business applications and the research and implementation of new information technologies. Managing the IT processes, professionals, and subunits within a company’s IT organization and IS function. Teaching Tips This slide relates to the material on pp. 424. © 2002 McGraw-Hill Companies

IT Strategic Planning Management Chapter 1 IT Strategic Planning Management E-Business Application Development & Deployment E-Business IT Strategies and Architecture Models Customer and Business Value Visioning Key Insights Key Objectives Priorities More Questions Feedback Both the CEO and the chief information officer (CIO) of a company are involved in the e-business IT strategic planning process. This process focuses on using key insights to discover innovative approaches to satisfy a company’s customer value and business value goals. This planning process leads to the development of strategies and business models for new e-business and e-commerce platforms, processes, products, and services. With these key objectives identified, the company can develop IT strategies and an IT architecture that supports building and implementing newly prioritized e-business applications. Feedback on the performance of an implemented strategy allows the key decision-makers an opportunity to evaluate the effectiveness of their strategies. The e-business IT Strategic planning process has three major components: Strategy Development. Using key insights to develop e-business and e-commerce strategies that support a company’s business vision. Resource Management. Determining what resources are needed to fulfill the strategy developed, and developing strategic plans for managing or outsourcing those resources. Technology Architecture. Selecting the IT computing platform or IT architecture to support a company’s e-business initiatives. The selected IT architecture should include: a. Technology Platform. What telecommunications infrastructure is best suited to meet strategic needs: intranets, extranets, Internet, VPN, etc.? What computer systems: client/server, NetPCs, mainframe, superservers? b. Data Resources. What types of operational and specialized databases are needed to support business processes and decision support? c. Application Portfolio. What business applications are needed to support business initiatives? Cross-functional enterprise systems, traditional business information systems, decision support systems, etc.? d. IT Organization. Given the computing platforms and the application portfolio, what IS specialists are needed? What type of IT organization would be most appropriate? Teaching Tips This slide corresponds to Figure 12.8 on pp. 425 and relates to the material on pp.425-426. © 2002 McGraw-Hill Companies

Benefits Derived from Company IT Planning Chapter 1 Reduced support costs Reduced complexity Expertise portability Interoperability Volume discounts Reduced training costs Information sharing Most organizations establish and enforce policies for the acquisition of hardware and software by end users and business units. This ensures their compatibility with company standards for hardware, software, and network connectivity. Also important is the development of applications with proper security and quality controls to promote correct performance and safeguard the integrity of corporate and departmental networks and databases. Teaching Tips This slide corresponds to Figure 12.9 on pp. 427 and relates to the material on pp.426-427. © 2002 McGraw-Hill Companies

Managing the IS Function Chapter 1 Managing the IS Function Application Development Systems Analysis Systems Design Programming System Maintenance IT Operations Management Network Management Production Control Product Support Systems Performance Human Resource Management IS Recruiting Training Retainment Programs Support Staff The IT organization structure has radically changed in the last few years. The shift towards decentralized IS teams and decentralized IS management, evident in the 1980’s and 90’s, has recently been replaced with a return to centralized control and management of IS resources. This has resulted in the development of hybrid organization structures with both centralized and decentralized elements. Some companies have spun-off their IS organizations into subsidiaries or business units. Others have relied on outsourcing IS functions to either application service providers or system integrators. Regardless of these organizational changes, the IS organization function still involves three major components: Application Development Management. Involves managing activities such as systems analysis and design, project management, application programming and systems maintenance for all major e-business IT development projects. IT Operations Management. Involves the management of hardware and software, network resources. Operational activities that must be managed include computer system operations, network management, production control, and production support. Many of these management activities are automated. For example, system performance monitors monitor the processing of computer jobs and in some cases actually control operations at large data centers. Most system performance monitors supply information needed by chargeback systems. These are systems that allocate costs to users based on the information services rendered. Human Resource Management. Involves recruiting, training, and retaining qualified IS personnel. Such personnel may include managerial, technical, as well as clerical support staff. Teaching Tips This slide relates to the material on pp. 428-429. © 2002 McGraw-Hill Companies

Global e-Business Technology Management Chapter 1 Global e-Business Technology Management Systems Development Data Resource Management Internet-based Technology Platforms e-Business Application Portfolios e-Business/IT Strategies Global IT Cultural, Political, and Geoeconomic Challenges As e-businesses enter into the global marketplace, managing global information systems has become a vital part of managing an e-business. As shown in the slide, developing appropriate e-business IT strategies for the global marketplace should be the first step in global e-business technology management. Once this is done, end user and IS management develop the application portfolio and the technology platform needed to support the company’s strategy. In addition, as shown on the slide, managing global information technology requires taking into account the cultural, political, and geoeconomic challenges that exist in the international business community. Political Challenges. Many countries have rules regulating or prohibiting transfer of data across their national borders. Other countries limit, tax, or prohibit importation of hardware and software. Local content laws specifying value-added contributions to products required in-country and reciprocal trade agreements affecting the spending of revenue earned in the country, all complicate the management of IT in global contexts. Geoeconomic Challenges. The uneven development of the world’s economies makes it difficult to take advantage of some opportunities (such as low labor costs) and often presents obstacles such as poorly developed telecommunications and physical transportation infrastructures. Cultural Challenges. Global IT managers must be thoroughly trained in, and sensitive to, the differences in cultural values, beliefs, and practices of the host country in which the global firm seeks to do business. For example, cultural differences in work style and business relationships can determine whether cooperative teamwork or individual task work would be most suitable for a specific cultural environment. Teaching Tips This slide corresponds to Figure 12-13 on pp. 434 and relates to the material on pp. 434-449. © 2002 McGraw-Hill Companies

Global e-Business Strategies Chapter 1 Global e-Business Strategies Transactional -Virtual e-Businesses -World Markets -Transparent Manufacturing -Global Supply Chain -Global Alliances International -Autonomous operations -Region Specific -Vertical Integration -Specific Customers -Captive Global -Global Sourcing -Multiregional -Horizontal Integration -Some transparency of customers and production Many companies are moving towards transnational strategies, in which they integrate their global e-business activities through close cooperation and interdependence among international subsidiaries and their corporate headquarters, rather than autonomously operated foreign subsidiaries, or corporate headquarters central management. Companies adopting a transnational approach rely on the Internet and related technologies as a major component of their IT platform for developing and delivering global IT applications that meet unique global business requirements. Such technologies are capable of providing the online global infrastructure needed to support global e-business and e-commerce. Companies also rely on global data resources and integrated global enterprise systems to provide regional transparent end user services. Teaching Tips This slide corresponds to Figure 12.14 on pp. 436 and relates to the material on pp. 435-436. © 2002 McGraw-Hill Companies

Business Drivers for Global e-Business Chapter 1 Business Drivers for Global e-Business Global Customers Global Products Global Operations Global Resources Global Collaboration Business Drivers for Global e-Business Global business applications should not only be consistent with e-business IT strategies, they should also take into account business requirements caused by the nature of the industry, its competitive forces, and its environmental forces. These global business drivers include: Customer Attributes. Some industries serve customers who are global customers--customers who travel widely or have global operations. In such cases, global online transaction processing may become an e-business critical application. Global Production and Operations. When product development is assigned to subsidiaries around the world, the production process and quality control of that process can only be effectively managed by global IT. Global IT supports geographic flexibility, allowing production to be assigned to a subsidiary based on changing environmental conditions. It also can support worldwide marketing of products and services. Economies of Scale. A global company and its subsidiaries can share the use of common equipment, facilities, and people, making business processes more cost efficient. Global Collaboration. Likewise, when knowledge and expertise of a company is spread around the world, global IT is needed to support enterprise collaboration. Teaching Tips This slide corresponds to Figure 12.16 on pp. 437 and relates to the material on pp. 436-438. © 2002 McGraw-Hill Companies

Global IT Platform Issues Chapter 1 Global IT Platform Issues Global Systems Development Local vs. Global Requirements Multilingual Needs Standardization of Data Scheduling Global Activities Global Infrastructure Global Data Access Regulated Access Transborder Data Flows Global Computing Facilities Hardware acquisitions Import restrictions Software compatibility Local service Balancing workloads Lack of spare parts As stated earlier, the management of the IT architecture, or technology platform, is a major concern of global IT management. Management of the technology platform is not only technically complex, but carries with it numerous political and cultural challenges. These include the following: Global Computing Facilities. Establishing computing facilities internationally is a global challenge. Data centers must meet local and regional computing needs and balance global computing workloads. Hardware acquisitions may be difficult because of high prices, high tariffs and import restrictions, long lead times for government approvals, lack of local service, or spare parts. Likewise software packages developed in Europe may be incompatible with American or Asian versions. For these reasons, most global businesses contract with system integrators like EDS and IBM to manage overseas operations. Global Communication Infrastructure. As stated earlier the Internet has become a vital component in the global e-business. By connecting businesses to this online global infrastructure, companies can reduce communications and distribution costs. However, companies must be cognizant of sensitive political issues. One of the major areas of political controversy is global data access. Many countries view transborder data flows as violating their national sovereignty. Other view transborder data flows as a violation of their privacy legislation, or laws developed to protect a particular industry. Other governments regulate or monitor Internet access. Most countries, however, have come to recognize access denial as limiting their participation in the electronic commerce marketplace. Global Systems Development. Global systems development presents numerous challenges to managers. These include: - Balancing local and global system and user requirements. - Developing multilingual user interfaces. - Global standardization of data definition. For example, a ‘sale’ in one country is an ‘order booked’ in another. - Handling global time differences; global time zones make it difficult to schedule development, implementation, and maintenance activities. Late evening in one country is mid-day in another. Several strategies can be used for handling some of these issues: Application Transformation. Transform an application used by the home office into a global application. Multinational Development. Set up a multinational development team with key people from each subsidiary. Parallel Development. Parts of a system are assigned to different subsidiaries and the home office to develop, based on experience and expertise. Teaching Tips This slide relates to the material on pp. 438-443. © 2002 McGraw-Hill Companies

Chapter 1 Chapter Summary e-Business technologies are changing the distribution, relationships, resources, and responsibilities of managers. High-quality information system performance is dependent on extensive and meaningful management and user involvement in the governance and development of IT applications. The organizational structure and roles of e- business companies are undergoing major change as they strive to become customer- focused. © 2002 McGraw-Hill Companies

Chapter Summary (cont) Managing IT in an e-business has three major objectives: Managing the joint development and implementation of e-business IT strategies. Managing the development of e-business applications and the research and implementation of new technologies. Managing IT processes, professionals, and subunits within the company. © 2002 McGraw-Hill Companies

Chapter Summary (cont) Managing global e-business technologies includes: Dealing with cultural, political, and geoeconomic challenges posed by various countries. Developing appropriate business and IT strategies. Developing a portfolio of global e-business and e- commerce applications and an Internet-based technology platform to support them.

Chapter Summary (cont) Many businesses are becoming global companies and moving towards transnational e-business strategies in which they integrate the global business activities of their subsidiaries and headquarters. © 2002 McGraw-Hill Companies