1. 12-1 McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Local and International Management of Information Technology Management of Information Technology Outsourcing and Offshoring Global Business/IT Strategy Chapter 12 McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.

3. 12-3 Learning Objectives 1. Identify each of the three components of information technology management, and use examples to illustrate how they might be implemented in a business. 2. Explain how failures in IT management can be reduced by the involvement of business managers in IT planning and management. 3. Identify several cultural, political, and geoeconomic challenges that confront managers in the management of global information technologies.

4. 12-4 Learning Objectives 4. Explain the effect on global business/IT strategy of the trend toward a transnational business strategy by international business organizations. 5. Identify several considerations that affect the choice of IT applications, IT platforms, data access policies, and systems development methods by a global business enterprise. 6. 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 Components of IT Management

6. 12-6 Managing Information Technology Managing the joint development and implementation of business and IT strategies Use IT to support the strategic business priorities Align IT with strategic business goals Managing the development and implementation of new business/IT applications and technologies Managing information systems development Managing the IT organization and IT infrastructure Hardware, software, database, networks and other resources

7. 12-7 Business/IT Planning Process

8. 12-8 Components of Business/IT Planning Strategy Development Developing business strategies that support a company’s business vision Resource Management Developing strategic plans for managing or outsourcing a company’s IT resources Technology Architecture Making strategic IT choices that reflect an information technology architecture designed to support a company’s business/IT initiatives

9. 12-9 Information Technology Architecture Technology Platform Networks, computer systems, system software and integrated enterprise application software Data Resources Operational and specialized databases Store and provide data and information for business processes and decision support

10. 12-10 Information Technology Architecture Applications Architecture Integrated architecture of enterprise systems that support strategic business initiatives as well as cross- functional business processes IT Organization Organizational structure of the IS function within a company and the distribution of IS specialists

11. 12-11 Organizing IT Early years: centralization of computing with large mainframes Next: downsizing trend with a move back to decentralization Current: centralized control over the management of IT while serving strategic needs of business units Hybrid of both centralized and decentralized components

12. 12-12 Organizational Components of IT at Avnet Marshall

13. 12-13 Application Development Management Managing activities such as: Systems analysis and design, prototyping, applications programming, project management, quality assurance, and system maintenance for all major business/IT development projects

14. 12-14 IS Operations Management Use of hardware, software, network, and personnel resources in the corporate or business unit data centers of an organization Includes computer systems operations, network management, production control and production support Data centers are the computer centers of an organization

15. 12-15 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, and Produce detailed statistics that are invaluable for effective planning and control of computing capacity

16. 12-16 Features of Systems Performance Monitors Chargeback Systems Allocate costs to users based on the information services rendered Process Control Capabilities Systems that not only monitor but automatically control computer operations at large data centers

17. 12-17 IT Staff Planning Recruiting, training and retaining qualified IS personnel Evaluate employee job performances and reward outstanding performances with salary increases and promotions Set salary and wage levels and design career paths so individuals can move to new jobs through promotion and transfer as they gain in seniority and expertise

18. 12-18 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 technology management: all information technology planning and deployment Managing the IT platform Second in command

19. 12-19 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

20. 12-20 Outsourcing The purchase of goods or services from third-party partners that were previously provided internally

21. 12-21 Outsourcing’s Top Ten

22. 12-22 Why outsource? Save money – achieve greater ROI Focus on core competencies – organization can focus on the business that they are in Achieve flexible staffing levels Gain access to global resources Decrease time to market

23. 12-23 Offshoring Relocation of an organization’s business processes To a lower-cost location, usually overseas

24. 12-24 IT Management Failures IT not used effectively Computerize traditional business processes Instead of developing innovative e-business processes IT not used efficiently Poor response times and frequent downtimes Poorly managed application development projects

25. 12-25 Management Involvement and Governance Managerial and end user involvement Key ingredient to high-quality information systems performance Involve managers in the management of IT Governance structures such as steering committees

26. 12-26 Senior management’s involvement in business/IT decisions

27. 12-27 Global IT Management Develop appropriate business and IT strategies for the global marketplace Develop the portfolio of business applications needed to support business/IT strategies Determine the technology platform needed Determine the systems development projects that will produce the required global information systems

28. 12-28 Global IT Management Dimensions

29. 12-29 Global IT Management Challenges Political Geoeconomic – effects of geography on the economic realities of international business activities Cultural

30. 12-30 Political Challenges Rules regulating or prohibiting transfer of data across national boundaries Severely restricted, taxed, or prohibited imports of hardware and software 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 Reciprocal trade agreements that require a business to spend part of the revenue they earn in a country in that nation’s economy

31. 12-31 Geoeconomic Challenges Sheer physical distances Difficult to get good-quality telephone and telecommunications services Differences in the cost of living and labor costs

32. 12-32 Cultural Differences Languages Cultural Interests Religions Customs Social Attitudes Political Philosophies

33. 12-33 Transnational Strategies Business depends heavily on its information systems and Internet technologies to help integrate global business activities Develop an integrated and cooperative worldwide IT platform

34. 12-34 Transnational Business/IT strategies

35. 12-35 Global Business Drivers Business requirements caused by the nature of the industry and its competitive or environmental forces Examples of drivers: Global Customers Global Products Global Operations Global Resources Global Collaboration

36. 12-36 Global IT Platform Managing the hardware, software, data resources, telecommunications networks, and computing facilities that support global business operations Technically complex with major political and cultural implications

37. 12-37 International Data Communications Top 10 Issues

38. 12-38 Internet as a Global IT Platform Technology platform free of many traditional international boundaries and limits Expand markets, reduce communications and distribution costs, and improve profit margins without massive cost outlays for telecommunications

39. 12-39 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?

40. 12-40 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?

41. 12-41 Internet Users by World Region

42. 12-42 Global Data Access Issues Transborder Data Flows Business data flow across international borders over the telecommunications networks of global information systems May be viewed as violating a nation’s sovereignty because avoids custom duties Or violating their laws to protect local IT industry from competition or their labor regulations for protecting local jobs

43. 12-43 U.S.-E.U Data Privacy Requirements 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

44. 12-44 Internet Access Issues in Most Restrictive Countries High Government Access Fees Government Monitored Access Government Filtered Access No Public Access Allowed

45. 12-45 Global Systems Development Conflicts over local versus global system requirements Difficulties in agreeing on common system features Disturbances caused by systems implementation and maintenance activities Global standardization of data definitions

46. 12-46 Systems Development Strategies Transform an application used by the home office into a global application System used by a subsidiary that has the best version of an application will be chosen for global use Set up a multinational development team with key people from several subsidiaries to ensure that the system design meets the needs of local sites as well as corporate headquarters

47. 12-47 Systems Development Strategies Parallel Development – parts of the system are assigned to different subsidiaries and the home office to develop at the same times based on the expertise and experience at each site Centers of Excellence – an entire system may be assigned for development to a particular subsidiary based on their expertise in the business or technical dimensions needed for successful development Offshore Development – outsource the development work to a global development company

48. 12-48 Internet-enabled Collaboration in IT Development Source: Adapted from Jon Udell, “Leveraging a Global Advantage,” Infoworld, April 21, 2003, p. 35.