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

2. Enterprise and Global 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. Learning Objectives

Identify each of the three components of information technology management, and 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.

Identify several cultural, political, and geoeconomic challenges that confront managers in the management of global information technologies.

4. Learning Objectives

Explain the effect on global business/IT strategy of the trend toward a transnational business strategy by international business organizations.

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. Case 1:Some People Just Never Learn

IT failures

• Show up in earnings losses

• User companies often file lawsuits against vendors or consultants

• Notorious failures are usually big and complex projects

Companies repeat the same mistakes

6. Case Study Questions

What are some of the reasons projects such as those discussed in the case end up as failures?

What key management decisions might help to prevent IT failures?

Why are companies often too embarrassed to report their IT failures?

7. Real World Internet Activity

The IT failures reported in the case occurred prior to 2000.Using the Internet,

• See if you can find examples of more recent IT failures.

• What caused them to occur?

• Have we learned anything to help prevent such failures in the future?

8. Real World Group Activity

As we learned in Chapter 10, an IT project can fail as a result of mistakes that occur even during the late stages of implementation.In small groups,

• Discuss how you would manage a project to ensure its success.

• What are the key success factors that you would pay close attention to in your project.

9. Components of IT Management 10. 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

11. Business/IT Planning Process 12. Components of Business/IT Planning

Strategy Development

• Developing business strategies that support a companys business vision

Resource Management

• Developing strategic plans for managing or outsourcing a companys IT resources

Technology Architecture

• Making strategic IT choices that reflect an information technology architecture designed to support a companys business/IT initiatives

13. 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

14. 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

15. 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

16. Organizational Components of IT at Avnet Marshall 17. 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

18. 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 centersare the computer centers of an organization

19. 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

20. 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

21. 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

22. 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 oftechnology management :all information technology planning and deployment

• Managing the IT platform

• Second in command

23. Managing User Services

Business units that support and manage end user and workgroup computing

Can be done withinformation centersstaffed with user liaison specialists

Or with Web-enabled intranet help desks

24. Outsourcing

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

25. Outsourcings Top Ten 26. 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

27. Offshoring

Relocation of an organizations business processes

To a lower-cost location, usually overseas

28. 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

29. 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

30. Senior managements involvement in business/IT decisions 31. Case 2: CIOs Need to Think Globally and Act Locally

Enterprises globalize for different reasons

• Examples:global customers, seeking growth opportunities, cost efficiencies

CIOs IT globalization decisions should

• Determine the balance of global integration versus local responsiveness

• Align ITs major processes with the enterprises governance orientation

• Assign staff, roles, and competencies appropriately

32. 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 CIO manage the requirements to both globalize and localize the IT function?

33. Real World Internet Activity

One of the issues facing the CIO is the assessment of IT maturity in the countries they operate in.Using the Internet,

• See if you can find examples of countries where the IT maturity is still low and, thus presents a greater challenge.

• What are the characteristics of a low IT maturity country?

34. Real World Group Activity

One of the prescriptions offered in the case was to align ITs major processes with the enterprises governance orientation.In small groups,

• Discuss the meaning of this prescription.

• What is meant by governance orientation?

• How can IT become better aligned with the organization in this regard?

• Is there one right way to govern IT?

35. 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

36. Global IT Management Dimensions 37. Global IT Management Challenges

Political

Geoeconomic effects of geography on the economic realities of international business activities

Cultural

38. 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 nations economy

39. Geoeconomic Challenges

Sheer physical distances

Difficult to get good-quality telephone and telecommunications services

Differences in the cost of living and labor costs

40. Cultural Differences

Languages

Cultural Interests

Religions

Customs

Social Attitudes

Political Philosophies

41. 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

42. Transnational Business/IT strategies 43. 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

44. 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

45. International Data Communications Top 10 Issues 46. 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

47. 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?

48. 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?

49. Internet Users by World Region 50. 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 nations sovereignty because avoids custom duties

• Or violating their laws to protect local IT industry from competition or their labor regulations for protecting local jobs

51. 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

52. Internet Access Issues in Most Restrictive Countries

High Government Access Fees

Government Monitored Access

Government Filtered Access

No Public Access Allowed

53. 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

54. 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

55. 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

56. Internet-enabled Collaboration in IT Development Source: Adapted from Jon Udell, Leveraging a Global Advantage,Infoworld,April 21, 2003, p. 35. 57. Case 3:The Hard Road to Outsourcing

Can cut the cost of IT work by 39 percent by outsourcing it abroad

But it carries privacy risks

And threatens US jobs

58. Case Study Questions

The law does not provide for companies to disclose to their customers the fact that they have outsourced or offshored access to their data.Is this a potential problem for either the company or the customer?Why or why not?

What is meant by the term best-of-breed model?Why has this approach worked for Boeing?

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?

59. Real World Internet Activity

Each of the companies in the case shares a common goal, but from a different perspective.As we learned in the chapter, there are a variety of reasons why a company may choose to outsource.Using the Internet and Figure 12.8 as your guide,

• See if you can find examples of companies who have chosen to outsource for reasons different from the three outlined in the case.

• What were their reasons?

60. Real World Group Activity

Outsourcing and offshoring are controversial issues particularly when it comes to jobs.In small groups,

• Discuss the pros and cons of this issue.

• Should we curtail outsourcing and offshoring to protect jobs?

• Are new jobs being created to replace the ones lost?