1. Enterprise and Global Management of Information Technology Chapter 12 Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2. 12-2 Learning Objectives Identify 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

3. 12-3 Learning Objectives Identify several cultural, political, and geo- economic challenges that confront managers in the management of global information technologies Explain how the trend toward a transnational business strategy by international business organizations affects global business/IT strategy

4. 12-4 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

5. 12-5 Business and IT Global e-business E-commerce As the 21st century unfolds, many companies are transforming themselves into global powerhouses via major investments in… Other IT initiatives Business managers and professionals must know how to manage this vital organizational function

6. 12-6 Case 1: Toyota, Procter & Gamble, Hess Corp… The role of a CIO has become very strategic –Tomorrow’s CIOs will be even more involved in strategic thinking and influential –Skills needed to be a CIO have changed from being a technologist to business strategist Developing and mentoring successors is a key responsibility of IT leaders in an environment that includes the changing role of the CIO and a shortage of qualified managers

7. 12-7 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?

8. 12-8 Case Study Questions 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?

9. 12-9 Case Study Questions How can CIOs prepare their successors for an uncertain future that will most likely require skills different from those possessed by successful CIOs today? –Which key competencies are enduring, and which are a function of the current technological environment? –How can CIOs prepare for the latter?

10. 12-10 Components of IT Management

11. 12-11 The Business/IT Planning Process

12. 12-12 The Business/IT Planning Process Major components of business/IT planning Strategic development Resource management Technology architecture

13. 12-13 Information Technology Architecture The IT architecture is a conceptual design that includes these major components Technology platform Data resources Application architecture IT organization

14. 12-14 Managing the IT Function Companies have essential applications on their intranets, without which they cannot function It became apparent that maintaining PCs on a network is very, very expensive The Internet boom inspired businesses to connect their networks Three things recently happened Created an urgent need for centralization

15. 12-15 Organizing IT Early Years Centralization of computing with large mainframes Next Downsizing and moving back to decentralization Current Centralized control over the mgmt of IT Serving the strategic needs of business units Hybrid of centralized and decentralized components

16. 12-16 Avnet Marshall Organizational Components

17. 12-17 Managing Application Development Systems analysis & design System maintenance Quality assurance Project management Applications programming Prototyping Application development involves…

18. 12-18 Managing IS Operations IS operations management –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

19. 12-19 System Performance Monitors Software packages that… Monitor computer job processing Optimize computer system performance Facilitate capacity planning and control

20. 12-20 Features of System Performance Monitors Chargeback Systems Allocates costs to users based on the information service rendered Process Control Capabilities Systems that monitor and automatically control computer operations at large data centers

21. 12-21 IT Staff Planning Evaluating employees and rewarding good job performance with salary increases, promotions Designing career paths Setting salary and wage levels Recruiting, training, and retaining qualified IS personnel

22. 12-22 IT Executives Chief Information Officer (CIO) Chief Technology Officer (CTO) Oversees all uses of IT Aligns IT with strategic business goals Second in command Manages the IT platform In charge of all IT planning/deployment

23. 12-23 Other IT Positions Systems analyst E-commerce architect Chief Security Officer Technical team leader

24. 12-24 Technology Management All IT technologies must be used as a technology platform for integrating business applications –Both internally or externally focused –Includes Internet, intranets, electronic commerce, collaboration technologies, CRM software, enterprise resource planning, and supply chain management Often the primary responsibility of a chief technology officer

25. 12-25 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

26. 12-26 Outsourcing The purchase of goods or services from third-party partners that were previously provided internally

27. 12-27 Why Companies Outsource

28. 12-28 Offshoring This location is typically overseas Can be either production or service Relocation of an organization’s business processes to a lower-cost location Digitization of many services Availability of large amounts of reliable and affordable communication infrastructure Growth of services offshoring linked to…

29. 12-29 Failures in IT Management IT not used effectively Computerizing traditional business processes instead of developing innovative e-business processes IT not used efficiently Poorly managed application development Poor response times Frequent downtime

30. 12-30 Management Involvement & Governance Managerial and end user involvement –Key ingredient to high-quality information system performance –Optimizes business value of IT Governance structures –Steering committees, executive councils –Encourages active participation in planning and controlling business uses of IT –Helps avoid post-development problems

31. 12-31 Sr. Management’s Involvement in IT

32. 12-32 IT Governance Approaches Control Objectives for Information and Technology (COBIT) –Framework for IT management –Set of generally accepted measures, indicators, processes, and best practices Covers four domains –Planning and organization –Acquisition and implementation –Delivery and support –Monitoring

33. 12-33 COBIT in Action

34. 12-34 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 Concentrates on maximizing risk-adjusted return from both knowledge and technology assets

35. 12-35 Case 2: Reinsurance Group of America, Fronterrra Consistency across the different business functions, countries, languages, and processes in worldwide implementations is one of the most important challenges faced by global organizations today Reinsurance Group of America had to develop a single system to manage reinsurance business processes for numerous offices around the world –Staffs spoke different languages, in different time zones, and some were set in their way of managing the business Developing this system resulted in ROI of 15%, which was better than expected

36. 12-36 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 full-blown versus a phased approach for system implementations in general, and global ones in particular? –How do you decide which road to take?

37. 12-37 Case Study Questions 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?

38. 12-38 Global IT Management Dimensions

39. 12-39 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

40. 12-40 Global IT Management Challenges Geo-economic Challenges Physical distances still a major problem Takes too long to fly in specialists Hard to communicate in real time across time zones Poor telephone and telecommunications services May be hard to find skilled local workers Differences in the cost of living and labor costs

41. 12-41 Global IT Management Challenges Cultural Challenges Language and cultural interests Religions and customs Political philosophies Cultural training needed before assignments Work styles and business relationships

42. 12-42 Transnational Strategies Business depends heavily on information systems and Internet technologies to help integrate global business activities This requires an integrated and cooperative worldwide IT platform Companies are moving toward a transnational strategy

43. 12-43 Transnational Business/IT Strategies

44. 12-44 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

45. 12-45 Global IT Platforms Hardware Difficulties Import restrictions High pricesHigh tariffs Lack of “localized” documentation Long lead times for government approvals No local service or spare parts

46. 12-46 Global IT Platforms Software Difficulties Software publisher may refuse to supply markets that disregard software licensing and copyright agreements Packages developed in Europe may be incompatible with American or Asian versions

47. 12-47 International Data Communications Issues

48. 12-48 The Internet as a Global IT Platform An interconnected matrix that reaches tens of millions of users in over 100 countries Business environment free of traditional boundaries and limits The Internet Expand markets Reduce communications and distribution costs Without incurring massive cost outlays for telecommunications, companies can… Improve profit margins

49. 12-49 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?

50. 12-50 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?

51. 12-51 Internet Users by World Region

52. 12-52 Global Data Access Issues Transborder Data Flows may be seen 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

53. 12-53 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

54. 12-54 Internet Access in Restrictive Countries The struggle between Internet censorship and openness at the national level relates to –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

55. 12-55 Global Government Internet Restrictions High Government Access Fees –Kazakhstan, Kyrgyzstan Government Monitored Access –China, Iran, Saudi Arabia, Azerbaijan, Uzbekistan Government Filtered Access –Belarus, Cuba, Iraq, Tunisia, Sierra Leone, Tajikistan, Turkmenistan, Vietnam No Public Access Allowed –Burma, Libya, North Korea

56. 12-56 Global Systems Development Key Development Issues Local versus global system requirements Getting agreement on system features Global standardization of data definitions Disturbances caused by systems implementation and maintenance activities

57. 12-57 Global Systems Development Key development strategies –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

58. 12-58 Internet-Enabled IT Development

59. 12-59 Case 3: IBM Corporation 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

60. 12-60 Case 4: IBM Corporation 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

61. 12-61 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?

62. 12-62 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?