Managing Global Systems
Amina Tariq
Room # N111-C-------------------- Ext # 161
National University of Computer & Emerging Sciences
(Islamabad Campus)
Today We Explore:
• Major factors driving the internationalization of business.
• Compare strategies for developing global businesses.
• Demonstrate how information systems can support different
global business strategies.
• Identify the challenges posed by global information systems
and management solutions.
• Evaluate the issues and technical alternatives to be
considered when developing international information
systems.
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The Growth of International Information Systems
• Developing an international information systems
architecture
• Understand overall business driver
• Analyze inhibitors/negative factors
• Develop corporate strategy to globally compete
• Organize for Strategy Execution
• Identify Management challenges
• Develop the right IT infrastructure
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The Growth of International Information Systems
International Information Systems Architecture
The major dimensions for developing an international information systems architecture
are the global environment, the corporate global strategies, the structure of the
organization, the management and business processes, and the technology platform.
Figure 15-2
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The Growth of International Information
Systems
• The global environment: business drivers and
challenges
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The Growth of International Information
Systems
• Business Challenges
– Particularism
• Corporations and companies must reconcile these
differences in order to allow transborder data flow
between merged information systems.
• State of the Art
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Global strategies and business
organization
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Global Systems for Strategy
Global Strategy and Systems Configurations
The large Xs show the dominant patterns, and the small Xs show the emerging patterns. For instance, domestic exporters rely predominantly on
centralized systems, but there is continual pressure and some development of decentralized systems in local marketing regions.
Figure 15-3
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Reorganizing Business
• Organize value-adding activities along lines of
comparative advantage
• Develop and operate systems units at each level
of corporate activity — regional, national, and
international.
• Establish a world headquarters, a single office
responsible for development of international
systems, a global chief information officer
(CIO) position
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Managing Global Systems
Local, Regional, and Global Systems
Agency and other coordination costs increase as the firm moves from local option systems toward regional
and global systems. However, transaction costs of participating in global markets probably decrease as firms
develop global systems. A sensible strategy is to reduce agency costs by developing only a few core global
systems that are vital for global operations, leaving other systems in the hands of regional and local units.
Source: From Managing Information Technology in Multinational Corporations by Edward M. Roche, © 1993.
Adapted by permission of Prentice Hall, Inc., Upper Saddle River, N.J.
Figure 15-4
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Managing Global Systems
• Global systems strategy
• Define the core business processes
• Identify the core systems to coordinate centrally
• Choose an approach: Incremental, grand design, evolutionary
• Make the benefits clear
• Results of the capital budgeting analysis
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Managing Global Systems
• MANGEMENT CHALLENGES
•
Get the opposition on your side as quickly as possible. Cooptation is the process
of getting the naysayers to help you determine the solution to the problem
without giving up total control of the change process. Persuading them to help
you is far better than beating them into submission.
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Technology Challenges
– Computing platforms and systems
integration
– Connectivity
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Technology Challenges
– Software
• Trying to merge databases from different
countries can be quite troublesome because
of the added layer of politics, traditions, and
languages
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Technology Challenges
Internet Population in Selected Countries
The percentage of the total population using the Internet in developing countries is much smaller than in
the United States and Europe.
Source: CIA World Factbook, 2005.
Figure 15-5
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Managing Global Systems Development
• Latest trend in the technology sector is
offshore software outsourcing
• It may appear much cheaper to transfer the
work to lower-paid employees in foreign
countries, there are hidden costs that may
not make it all that less expensive in the
long run.
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Hidden Costs of Outsourcing
• Contract costs
• Vendor selection costs
• Transition management and knowledge transfer
costs
• Domestic human resources costs
• Costs of improving software development
processes
• Costs of adjusting to cultural differences
• Cost of managing an offshore contract
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Total Cost of Outsourcing
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Think Global, Act Local: DHL Builds a Global IT
Organization
• Problem: Growing complexity of decentralized system, high costs, low
productivity, slow response to change.
• Solutions: Centralizing management, redesigning IT infrastructure,
and moving applications off local servers reduces costs and enables
faster response to change.
• Move to three low cost regional centers and strengthening local
communications links allows for consolidation of global package
tracking and logistics support system.
• Demonstrates IT’s role in centralizing management in global firms that
still have local concerns.
• Illustrates digital technology being used by global firms adjusting their
systems to support rapid growth in world trade.
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Suggested Reading
• Chapter 15 (Laudon & Laudon)
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