Chapter

14

Enterprise and Global

Management of Information
Technology

McGraw-Hill/Irwin

Copyright 2009 by The McGraw-Hill Companies, Inc. All rights

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

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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

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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
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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
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Case 1: Toyota, Procter & Gamble, Hess

Corporation, and Others
Today, the role of a CIO has become very
strategic. Tomorrows CIOs will be even more
involved in strategic thinking and influential in an
organization.
The skills needed to be a CIO has changed as
their role has shifted from being a technologist
to business strategist.
Developing and mentoring their successors is
one of the key responsibilities of IT leaders in an
environment that includes the changing role of
the CIO and a shortage of qualified managers.
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Case Study Questions

1. 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?
2. 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?

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Case Study Questions

3. How can CIOs prepare their

successors for an uncertain future
that will most likely require skills
different from those possessed by the
successful CIOs of today? Which key
competencies are enduring, and
which ones are a function of the
current technological environment?
How can CIOs prepare for the latter?
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Components of IT Management

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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

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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
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Organizing IT
Early Years
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
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Avnet Marshall Organizational Components

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Managing Application Development

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

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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
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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
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Other IT Positions

E-commerce architect
Technical team leader
Practice manager
Systems analyst

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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
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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

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Outsourcing

The purchase of goods or services from

third-party partners that were previously
provided internally
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Outsourcings Top Ten

14-24

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
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Offshoring
Relocation of an organizations 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

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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
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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
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Sr. Managements Involvement in IT

14-29

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

14-30

Case 2: Reinsurance Group of America

and Fronterrra
Consistency across the different business functions,
countries, languages and processes involved in worldwide
implementations is one of the most important challenges
faced by global organizations today.
Reinsurance Group of America faced with a challenge in
developing a single system that manages reinsurance
business processes for numerous offices around the world
offices whose staffs speak different languages, are in
different time zones, and just might be stuck in their ways
as to how they manage their business.
The result of developing this system resulted in a return
on investment of 15% which was better than expected.
14-31

Case Study Questions

1. 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?
2. What are the advantages and disadvantages of a fullblown
versus a phased approach for system implementations in
general, and global ones in particular? How do you make
the decision on which road to take?
3. 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?
14-32

Global IT Management Dimensions

14-33

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 nations
economy

14-34

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
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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
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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
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Transnational Business/IT Strategies

14-38

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

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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

14-40

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

14-41

International Data Communications

Issues

14-42

The Internet as a Global IT Platform

The Internet
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
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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?

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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 youll
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?
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Internet Users by World Region

14-46

Global Data Access Issues

Transborder Data Flows may be

viewed as violating
A nations sovereignty because it
avoids customs duties and regulations
Laws protecting the local IT industry
from competition
Laws protecting local jobs
Privacy legislation
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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

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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 countrys opportunities
for economic growth and prosperity

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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
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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

14-51

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

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Internet-Enabled IT Development

14-53

Case 3: General Motors: Factory IT

Faces Its Biggest Test Yet
Today companies need manufacturing capability that can
respond quickly to changing tastes of the consumers.
GM is looking at how it can make changes on the
production lines at its plants more deftly to react to shifting
consumer tastes.
In 2006 and 2007, the number of vehicles on which
production ceased because of IT related problems
decreased about 50% over 2005. So far in 2008, the
number of vehicles it has had to stop production on
because of IT related issues is less than 5% of the vehicles.
IT plays a big part in enabling GMs responses to market
demand.
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Case Study Questions

1. What are some of the major business benefits of the
type of technology rollout implemented by GM, e.g.
product routing and order management systems? What
other benefits may accrue to the company, beyond those
directly related to improved manufacturing efficiency?
Provide several examples from both categories.
2. One of the hallmarks of GMs rollout is the creation of
four command centers distributed throughout the world.
While local plants are the first line of defense, more
important issues are handled at these command centers.
What are some advantages and disadvantages of this
structure? Provide several examples of each and your
justification for inclusion in your list.
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Case Study Questions

3. While commonality and standardization
help GM improve its efficiency and reduce
costs, they may have the downside of
hindering innovation in the different plants.
Reread the statements by Kirk Gutmann to
this effect. Do you believe he means
innovation is not important? How could GM
strike a balance between these two
seemingly conflicting objectives? Provide a
recommendation and rationale for your
proposed course of action.
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Case 4: 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 highvalue products and services
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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

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Case Study Questions

1. Do you agree with IBMs employment
response to competition from software
development contractors in India like
Wipro that are expanding into IT
consulting services?
2. Will IBMs 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?
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Case Study Questions

3. 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?
14-60