2. Enterprise and Global Management of Information Technology
Chapter 14
Enterprise and Global Management of Information Technology

3. 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

4. Learning Objectives
Identify several cultural, political, and geo-economic challenges that confront managers in the management of global information technologies
Explain the effect on global business/IT strategy of the trend toward a transnational business strategy by international business organizations

5. Learning Objectives
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

6. 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

7. Case 1: Alternative Governance Models
The management of IT falls into five major governance decision areas
IT principles
IT architecture
IT infrastructure
Business application needs
Prioritization and investment decisions
How companies organize their business and IT management teams to make such decisions varies widely

8. Case 1: Alternative Governance Models
UPS’s IT Governance
An IT steering committee: four top executives who have primary responsibility for principles and investment decisions
An IT governance committee: senior IT executives responsible for key architecture
A formal “charter” process: winnows down IT project proposals to those best aligned with strategic objectives
An escalation process to handle exceptions to architecture standards

9. Case 1: Alternative Governance Models
Manheim Interactive
Like most high-growth start-ups, the company did not tightly govern its IT architecture or infrastructure
The focus on speed of IT delivery was unsustainable as the online business matured
IT governance has now transitioned to a blend of centralized and decentralized arrangements

10. Case 1: Alternative Governance Models
JPMorgan Chase
Encourages autonomy to generate innovation and recognize the very different requirements of its businesses
The company encourages the use of standardized technologies where they can provide economies of scale

11. Case 1: Alternative Governance Models
ING Direct
The company is organized into nine country-based businesses
Each country operates autonomously, but the units share a common business model
Business solutions, IT technical components, and the infrastructure as standardized
A council comprised of CIOs and COOs makes enterprisewide principles, architecture, infrastructure, and investment decisions

12. Case Study Questions
Is there a need for different IT governance arrangements among companies?
Why or why not?
Use UPS, JPMorgan Chase, and ING Direct as examples to defend your answer

13. Case Study Questions
Should the IT governance of an e-commerce start-up like Manheim Online differ from that used by its parent company, as Manheim Auctions was in this case?
Should the IT governance of an e-commerce venture change over time, as occurred with Manheim Online?

14. Case Study Questions
The five major governance decision areas outlined in the case tell us a lot about what is involved in the management of IT
Which of the decision areas should primarily be the province of the business management of the company?
Which should primarily be the responsibility of IT management?
Should all decisions be made jointly by both management groups?

15. Components of IT Management

16. 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

17. Comparing IT Management Approaches
Insert Figure 14.3 here

18. Managing the IT Function
Three things happened in the past few years
The Internet boom inspired businesses to connect their networks
Companies on 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

19. 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

20. Avnet Marshall Organizational Components

21. Managing Application Development
Application development management involves
Systems analysis and design
Prototyping
Applications programming
Project management
Quality assurance
System maintenance

22. 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

23. 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

24. 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

25. 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

26. 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

27. Other IT Positions E-commerce architect Technical team leader
Practice manager
Systems analyst

28. 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

29. 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

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

31. Outsourcing’s Top Ten

32. 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

33. 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

34. 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

35. 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

36. Sr. Management’s Involvement in IT

37. 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

38. Case 2: Offshoring & Giving Away Technology
Only services can provide growth on the scale that IBM needs to make shareholders happy
To combat cheaper offshore companies, IBM is giving away technology
In theory, giving away software, patents, and ideas will
Help the entire industry grow faster
Open new frontiers
Create opportunities for IBM to sell high-value products and services

39. Case 2: Offshoring & Giving Away Technology
To cut costs, IBM is also offshoring
India accounts for the largest number of IBMers outside the United States
By the end of next year, IBM Services head count in India will top 52,000
More than one-fourth of all services personnel
About one-sixth of IBMers worldwide

40. Case Study Questions
Do you agree with IBM’s employment response to competition from software development contractors in India like Wipro that are expanding into IT consulting services?
Will IBM’s plan to give away some of its IT assets and intellectual property and increase support of opensource software products be a successful growth strategy in the “brutally competitive marketplace” in which it operates?

41. Case Study Questions
Do you agree with IBM researchers’ assumption that IT will remain “hard to use, expensive, and labor-intensive, with customers continuing to need help solving business problems” for along time to come?
Should IBM bet its business on that assumption?

42. Global IT Management Dimensions

43. Global IT Management Challenges
Political challenges
Many countries regulate or prohibit the transfer of data across their national boundaries
Others severely restrict, tax, or prohibit imports of hardware and software
Some have local content laws that specify the portion of the value of a product that must be added in that country if it is to be sold there
Others require a business to spend part of the revenue they earn in a country in that nation’s economy

44. Global IT Management Challenges
Geoeconomic challenges
Physical distances are still a major problem
It may take too long to fly in specialists
It is difficult to communicate in real time across 24 time zones
Many countries do not have good telephone and telecommunications services
It may be hard to find skilled local workers
There can be great differences in the cost of living and labor costs between countries

45. Global IT Management Challenges
Cultural challenges
Languages
Cultural interests
Religions
Customs
Political philosophies
Global IT managers need cultural training before they are sent on assignment
Different work styles and business relationships

46. Transnational Strategies
Companies are moving toward a transnational strategy
Business depends heavily on information systems and Internet technologies to help integrate global business activities
Requires an integrated and cooperative worldwide IT platform

47. Transnational Business/IT Strategies

48. Global Business Drivers
Business requirements caused by the nature of the industry and its competitive or environmental forces
Examples of global drivers:
Customers
Products
Operations
Resources
Collaboration

49. Global IT Platforms Hardware Difficulties High prices High tariffs
Import restrictions
Long lead times for government approvals
Lack of local service or spare parts
Lack of documentation tailored to local conditions

50. Global IT Platforms Software Difficulties
Packages developed in Europe may be incompatible with American or Asian versions
The software publisher may refuse to supply markets that disregard software licensing and copyright agreements

51. International Data Communications Issues

52. The Internet as a Global IT Platform
An interconnected matrix that reaches tens of millions of users in over 100 countries
Business environment is free of traditional boundaries and limits
Without incurring massive cost outlays for telecommunications, companies can
Expand markets
Reduce communications and distribution costs
Improve profit margins

53. Key Questions for Global Websites
Will you have to develop a new navigational logic to accommodate cultural preferences?
What content will you translate, and what content will you create from scratch to address regional competitors or products that differ from those in the U.S.?
Should your multilingual effort be an adjunct to your main site, or will you make it a separate site, perhaps with a country-specific domain?

54. Key Questions for Global Websites
What kinds of traditional and new media advertising will you have to do in each country to draw traffic to your site?
Will your site get so many hits that you’ll need to set up a server in a local country?
What are the legal ramifications of having your website targeted at a particular country, such as laws on competitive behavior, treatment of children, or privacy?

55. Internet Users by World Region

56. Global Data Access Issues
Transborder Data Flows may be viewed as violating
A nation’s sovereignty because it avoids customs duties and regulations
Laws protecting the local IT industry from competition
Laws protecting local jobs
Privacy legislation

57. U.S.-E.U. Data Privacy Requirements
Key data privacy provisions
Notice of purpose and use of data collected
Ability to opt out of third-party distribution of data
Access for consumers to their information
Adequate security, data integrity, and enforcement provisions

58. Internet Access in Restrictive Countries
The struggle between Internet censorship and openness at the national level revolves around
Controlling the conduits
Filtering the flows
Punishing the purveyors
Most of the world has decided that restricting Internet access is not a viable policy
Restricting access also hurts a country’s opportunities for economic growth and prosperity

59. Global Government Internet Restrictions
High Government Access Fees
Kazakhstan, Kyrgyzstan
Government Monitored Access
China, Iran, Saudi Arabia, Azerbaijan, Ubekistan
Government Filtered Access
Belarus, Cuba, Iraq, Tunisia, Sierra Leone, Tajikistan, Turkmenistan, Vietnam
No Public Access Allowed
Burma, Libya, North Korea

60. Global Systems Development
Key development issues
Conflicts over local versus global system requirements
Trying to agree on common system features
Disturbances caused by systems implementation and maintenance activities
Global standardization of data definitions

61. Systems Development Strategies
Key strategies for global systems development
Transform an application used by the home office or a subsidiary into a global application
Set up a multinational development team
Parallel development
Centers of excellence
Offshore development

62. Internet-Enabled IT Development

63. Case 3: Thinking & Acting Globally
Globalization means different things to different people
There’s no single method for how it operates
Too often, strategic motivations for globalization aren’t matched by operational approaches to meet enterprise needs
Operating globally means striking a balance between central and local control of operations

64. Case 3: Thinking & Acting Globally
To ensure that IT-globalization decisions match the enterprises core needs and approaches
Determine the balance of global integration versus local responsiveness
Align IT’s major processes with the enterprise’s governance orientation
Assign staff, roles, and competencies appropriately

65. Case 3: Thinking & Acting Globally
Other issues to consider
The diversity of countries in which the company operates
The IT maturity in these countries

66. Case Study Questions
What are some of the forces driving IT organizations to globalize?
What are some of the local forces and challenges facing modern IT organizations?
How does a CEO manage the requirement to both globalize and localize the IT function?

67. Case 4: The Hard Road to Outsourcing
Outsourcing IT work abroad can cut the cost of IT by 39 percent
It carries privacy risks
It threatens U.S. jobs

68. Case Study Questions
The law does not provide for companies to disclose to their customers that they have outsourced or offshored access to their data
Is this a potential problem for either the company or the customer?
What is meant by the term “best-of-breed model?”
Why has this approach worked for Boeing?

69. Case Study Questions
GE wants to outsource its entire ERP system based, in part, on its successes with other outsourcing projects
Is it possible to outsource too much?