1. 1 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Chapter 12 Enterprise and Global Management of Information Technology

2. 2 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives  Identify ways that information technology has affected the job of managers.  Identify the seven major dimensions of a networked organization and explain how they can affect the success of a business.

3. 3 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives (continued)  Identify each of the three components of information technology management and use examples to show how they might be implemented in a business.  Explain how failures in IT management can be reduced by the involvement of business managers in IS planning and management.

4. 4 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives (continued)  Identify cultural, political, and geoeconomic challenges that confront managers in the management of global information technologies.  Explain the effect on global e-business strategy of the trend toward a transnational business strategy by international business organizations.

5. 5 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives (continued)  Identify considerations that affect the choice of IT applications, IT platforms, data access policies, and systems development methods by a global business enterprise.

6. 6 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Section I Managing Information Technology

7. 7 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Business and IT  As companies are transformed into global e- businesses and players in global e-commerce, it is vital for business managers and professionals to understand how to manage this vital function.

8. 8 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. The Impact of IT on Managers  A major force for precipitating or enabling organizational and managerial change  Enables innovative changes in managerial decision making, organizational structures, and managerial work activities

9. 9 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. The Impact of IT on Organizations  Key dimensions of the networked enterprise  Organizational structure  Leadership and governance  People and culture  Coherence  Knowledge  Alliances

10. 10 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Managing Information Technology  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 & implementation of new IT

11. 11 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Managing Information Technology (continued)  Three major components (continued)  Managing the IT processes, professionals, & subunits with the IT organization & IS function

12. 12 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Managing the IS Function  Organizing IT  Centralization  Decentralization  Latest trend, hybrid

13. 13 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Managing the IS Function (continued)  Managing Application Development  Involves managing activities such as  systems analysis and design  prototyping  applications programming  project management  quality assurance  systems maintenance

14. 14 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Managing the IS Function (continued)  Managing IS Operations  Managing the use of hardware, software, network, and personnel resources in data centers/computer centers within an organization

15. 15 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Managing the IS Function (continued)  Managing IS operations (continued)  Operational activities requiring management  Computer systems operations  Network management  Production control  Production support

16. 16 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Managing the IS Function (continued)  Managing IS Operations (continued)  System Performance Monitors  Monitor processing of computer jobs  Helps develop a planned schedule  Produce detailed stats for planning and control of computing capacity  Chargeback systems  Process control

17. 17 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Managing the IS Function (continued)  Human Resource Management of IT  Recruit qualified personnel  Develop, organize, and direct the capabilities of existing personnel  Train employees  Design career paths and set salary and wage levels

18. 18 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Managing the IS Function (continued)  The CIO and Other IT Executives  Chief Information Officer (CIO)  Oversees all use of IT in many companies.  Brings the IT function into alignment with strategic business goals  Concentrates on business/IT planning and strategy  Helps develop strategic uses of IT in e- business and e-commerce

19. 19 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Managing the IS Function (continued)  Technology Management  All IT must be managed as a technology platform for integrated e-business and e- commerce systems  May assign a Chief Technology Officer (CTO)  In charge of all IT planning and deployment

20. 20 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Managing the IS Function (continued)  Managing User Services  Functions to support and manage end user and workgroup computing  Provides both opportunities and problems for business unit managers  Help desks  Establish and enforce policies

21. 21 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Failures in IT Management  IT is not being used effectively by companies that use IT primarily to computerize traditional business processes, instead of using it for innovative e-business processes  IT is not being used efficiently by IS that provide poor response times and frequent down times or when application development projects are not managed properly

22. 22 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Failures in IT Management (continued)  Management Involvement and Governance  Senior management needs to be involved in critical business/IT decisions to optimize the business value and performance of the IT function.  Requires development of governance structures that encourage active participation in planning and controlling the business uses of IT.

23. 23 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Failures in IT Management (continued)  Helps avoid IS performance problems  Helps improve the strategic business value of IT

24. 24 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Section II Managing Global IT

25. 25 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. The International Dimension  A vital part of managing an e-business enterprise in the internetworked global economies and markets of today.

26. 26 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Global IT Management

27. 27 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Cultural, Political, and Geoeconomic Challenges  Cultural challenges  Differences in languages  Cultural interests  Religions  Customs  Social attitudes  Political philosophies

28. 28 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Cultural, Political, and Geoeconomic Challenges (continued)  Political challenges  Rules regulating or prohibiting transfer of data across their national boundaries  Severe restrictions, taxes, or prohibitions against imports of hardware and software  Local content laws  Reciprocal trade agreements

29. 29 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Cultural, Political, and Geoeconomic Challenges (continued)  Geoeconomic Challenges  The effects of geography on the economic realities of international business activities  Distance  Real-time communication  Lack of good-quality telephone and telecommunications service  Lack of job skills  Cost of living and labor costs

30. 30 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Global e-Business Strategies  Moving away from  Autonomous foreign subsidiaries  Autonomous foreign subsidiaries, dependent on headquarters for new processes, products, and ideas  Close management of worldwide operations by headquarters

31. 31 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Global e-Business Strategies (continued)  Moving toward  Reliance on information systems and Internet technologies to help integrate global business activities  An integrated, cooperative worldwide hardware, software, and Internet-based architecture for IT platforms

32. 32 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Global e-Business Applications  IT applications depend on a variety of global business drivers, caused by the nature of the industry and its competitive or environmental forces  Global customers  Global products  Global operations  Global resources  Global collaboration

33. 33 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Global IT Platforms  The technology infrastructure  Technically complex  Major political and cultural implications  Challenges  Managing international data communications networks  Network management issues  Regulatory issues  Technology issues  Country-oriented issues

34. 34 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Global IT Platforms (continued)  The Internet as a Global IT Platform  Companies can  Expand markets  Reduce communications and distribution costs  Improve their profit margins  Low cost interactive channel for communications and data exchange

35. 35 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Global Data Access Issues  Transborder data flows (TDF)  Data flow across international borders over telecommunications networks of global information systems

36. 36 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Global Data Access Issues (continued)  Many countries view TDF as violating their national sovereignty  Others, as violating their laws to protect the local IT industry or to protect local jobs  May view TDF as a violation of their privacy legislation

37. 37 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Global Data Access Issues (continued)  Internet Access Issues  High government access fees  Government monitored access  Government filtered access  No public access allowed

38. 38 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Global Systems Development  Challenges  Conflicts over local versus global system requirements  Difficulties agreeing on common system features  Disturbances caused by systems implementation and maintenance activities

39. 39 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Global Systems Development (continued)  Challenges (continued)  Trade-offs between developing one system that can run on multiple computer and operating system platforms, or letting each local site customize the software for its own platform  Global standardization of data definitions

40. 40 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Global Systems Development (continued)  Systems Development Strategies  Transforming an application used by the home office into a global application  Setting up a multinational development team to ensure the system design meets the needs of local sites as well as headquarters  Parallel development  Centers of excellence

41. 41 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Discussion Questions  What has been the impact of e-business technologies on the work relationships, activities, and resources of managers?  What can business unit managers do about performance problems in the use of information technology and the development and operation of information systems in their business units?

42. 42 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Discussion Questions (continued)  How are Internet technologies affecting the structure and work roles of modern organizations?  Will middle management wither away?  Will companies consist primarily of self- directed project teams of knowledge workers?

43. 43 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Discussion Questions (continued)  Should the IS function in a business be centralized or decentralized? What recent developments support your answer?  How will the Internet, intranets, and extranets affect each of the components of global information technology management?

44. 44 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Discussion Questions (continued)  How might cultural, political, or geoeconomic challenges affect a global company’s use of the Internet?  Will the increasing use of the Internet by firms with global e-business operations change their move toward a transnational business strategy?

45. 45 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Discussion Questions (continued)  How might the Internet, intranets, and extranets affect the business drivers or requirements responsible for a company’s use of global IT, as shown in the chapter?

46. 46 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 1 – USG Corp.  Evaluating the ROI of IT Investments  Why do many companies fail to evaluate the return on investment of their IT projects?  Is this good business practice?

47. 47 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 1 (continued)  What are some of the ROI measurement and incentive practices of the companies in this case that might help other companies evaluate the ROI of their IT investments?

48. 48 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 1 (continued)  Should business managers be responsible for justifying the ROI of IT investments that will benefit their business units?

49. 49 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 1 (continued)  Who should be involved in evaluating the ROI of the IT investment proposals of a company’s business units?  Why?

50. 50 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 2 – Agilent Technologies & Citibank  The Challenges of Consolidating Global IT  Do you agree with Agilent’s global IT consolidation goals and process?

51. 51 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 2 (continued)  Why did Agilent’s global IT consolidation get such a strong negative response from many business and IT stakeholders?  Could this reaction have been avoided?

52. 52 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 2 (continued)  What are the business benefits of Citibank’s global IT consolidation project?  How can a single global system still be customized for each country?

53. 53 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 2 (continued)  What challenges might arise in managing the global IT function at Agilent Technologies from this point on?  How would you meet such challenges?

54. 54 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 3 – Cisco Systems  Failure in Supply Chain Management  What caused Cisco’s $2.2 billion loss in unneeded inventory?  Could this situation have been avoided?

55. 55 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 3 (continued)  How is eHub supposed to avoid such losses in the future?  What problems might arise with this new system?

56. 56 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 3 (continued)  What can be done in the supply chain management process of any company to avoid situations like Cisco’s?

57. 57 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 4 – Merrill Lynch & Co.  The Business Case for Global IT Consolidation  Why has there been a trend toward centralizing systems among financial services firms?  What are the potential benefits and limitations of this trend?

58. 58 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 4 (continued)  What are the business benefits of Merrill Lynch’s new global order processing system?  What implementation challenges are involved?

59. 59 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 4 (continued)  Does the merger of Merrill’s global services division and its IT division make good business sense?

60. 60 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 5 – Fireman’s Fund, Allmerica Financial, & FMC  The Business Case for IT Outsourcing  What is the business value to Fireman’s Fund and Allmerica of outsourcing their computer operations?  What are some potential limitations of such outsourcing arrangements?

61. 61 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 5 (continued)  What is FMC’s motivation for its IT outsourcing?  What is the role of an IT organization at companies like those in this case, if much of their IT operations are outsourced?

62. 62 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 5 (continued)  What are the benefits and potential limitations of offshore and near-shore IT outsourcing arrangements?