Learning Objectives. Business and IT. Case Study Questions

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1 Learning Objectives Learning Objectives Identify the three components of information technology management Use examples to illustrate how they might be implemented in a business Identify several cultural, political, and geoeconomic challenges that confront managers in the management of global information technologies Chapter 12 Enterprise and Global Management of Information Technology Explain how failures in IT management can be reduced by the involvement of business managers in IT planning and management Explain how the trend toward a transnational business strategy by international business organizations affects global business/it strategy McGraw-Hill/Irwin Copyright 2010 by the McGraw-Hill Companies, Inc. All rights reserved Learning Objectives Business and IT 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 As the 21st century unfolds, many companies are transforming themselves into global powerhouses Global e-business E-commerce Other IT initiatives Business managers and professionals must know how to manage this vital organizational function The role of a CIO has become very strategic 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 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? 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? 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?

2 Components of IT Management The Business/IT Planning Process The Business/IT Planning Process Major components of business/it planning Strategic development Resource managemen t Technology architecture Information Technology Architecture Managing the IT Function Organizing IT Three things recently happened The IT architecture is a conceptual design that includes these major components Technology platform Data resources Application architecture IT organization The Internet boom inspired businesses to connect their networks 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 Created an urgent need for centralization Centralization of computing with large mainframes Downsizing and moving back to decentralization Centralized control over the mgmt of IT Serving the strategic needs of business units Hybrid of centralized and decentralized components Avnet Marshall Organizational Components Managing Application Development Managing IS Operations System maintenance Quality assurance Systems analysis & design Application development Project management Prototyping Applications programming 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

3 System Performance Monitors Features of System Performance Monitors IT Staff Planning Monitor computer job processing Optimize computer system performance Facilitate capacity planning and control 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 Recruiting, training, and retaining qualified IS personnel Setting salary and wage levels Evaluating employees and rewarding good job performance with salary increases, promotions Designing career paths IT Executives Other IT Positions Technology Management Chief Information Officer (CIO) Chief Technology Officer (CTO) Oversees all uses of IT Aligns IT with strategic business goals In charge of all IT planning/deployment Manages the IT platform Second in command E-commerce architect Systems analyst Technical team leader Chief Security Officer 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 Managing User Services Outsourcing Why Companies Outsource 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 The purchase of goods or services from third-party partners that were previously provided internally

4 Offshoring Failures in IT Management Management Involvement & Governance Managerial and end user involvement to a lower-cost location This location is typically overseas IT not used effectively Computerizing traditional business processes instead of developing innovative e-business processes Key ingredient to high-quality information system performance Optimizes business value of IT Can be either production or service Digitization of many services Availability of large amounts of reliable and affordable communication infrastructure IT not used efficiently Poor response times Frequent downtime Poorly managed application development Governance structures Steering committees, executive councils Encourages active participation in planning and controlling business uses of IT Helps avoid post-development problems IT Governance Approaches COBIT in Action 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 The International Dimension Case 2: Reinsurance Group of America, Fronterrra 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 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 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?

5 Global IT Management Dimensions Global IT Management Challenges 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? 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 Global IT Management Challenges Global IT Management Challenges Transnational Strategies 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 Cultural Challenges Language and cultural interests Religions and customs Political philosophies Cultural training needed before assignments Work styles and business relationships Companies are moving toward a transnational strategy Business depends heavily on information systems and Internet technologies to help integrate global business activities This requires an integrated and cooperative worldwide IT platform Transnational Business/IT Strategies Global Business Drivers Global IT Platforms Business requirements caused by the nature of the industry and its competitive or environmental forces Hardware Difficulties Examples of global drivers Customers Products Operations Resources Collaboration High prices Long lead times for government approvals High tariffs No local service or spare parts Import restrictions Lack of documentation

6 Global IT Platforms International Data Communications Issues The Internet as a Global IT Platform Packages developed in Europe may be incompatible with American or Asian versions Software Difficulties Software publisher may refuse to supply markets that disregard software licensing and copyright agreements The Internet An interconnected matrix that reaches tens of millions of users in over 100 countries Business environment free of traditional boundaries and limits Without incurring massive cost outlays for Expand markets Reduce communications and distribution costs Improve profit margins 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? 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? 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? Internet Users by World Region Global Data Access Issues U.S.-E.U. Data Privacy Requirements Internet Access in Restrictive Countries Transborder Data Flows may be seen as violating customs duties and regulations Laws protecting the local IT industry from competition Laws protecting local jobs Privacy legislation Key Data Privacy Provisions Notice of purpose and use of data collected Access for consumers to their information Ability to opt out of thirdparty distribution of data Adequate security, data integrity, and enforcement provisions 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 opportunities for economic growth and prosperity

7 Global Government Internet Restrictions Global Systems Development Global Systems Development 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 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 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 Internet-Enabled IT Development Case 3: IBM Corporation 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 high-value products and services 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 response to competition from software development contractors in India like Wipro that are expanding into IT consulting services? assets and intellectual property and increase support of opensource software products be expensive, and labor-intensive, with customers continuing to need help solving Should IBM bet its business on that assumption? operates?