Managing Global Systems Managing Global Systems Amina Tariq Room # N111-C Ext # 161 National University of Computer & Emerging Sciences (Islamabad Campus)

7/2/2015NUCES-Islamabad2 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.

7/2/2015NUCES-Islamabad3 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 The Growth of International Information Systems

7/2/2015NUCES-Islamabad4 International Information Systems Architecture Figure 15-2 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. The Growth of International Information Systems

7/2/2015NUCES-Islamabad5 The global environment: business drivers and challenges The Growth of International Information Systems

7/2/2015NUCES-Islamabad6 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 The Growth of International Information Systems

7/2/2015NUCES-Islamabad7 Global strategies and business organization

7/2/2015NUCES-Islamabad8 Global Strategy and Systems Configurations Figure 15-3 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. Global Systems for Strategy

7/2/2015NUCES-Islamabad9 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

7/2/2015NUCES-Islamabad10 Local, Regional, and Global Systems Figure 15-4 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, © Adapted by permission of Prentice Hall, Inc., Upper Saddle River, N.J. Managing Global Systems

7/2/2015NUCES-Islamabad11 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 Managing Global Systems

7/2/2015NUCES-Islamabad12 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. Managing Global Systems

7/2/2015NUCES-Islamabad13 Technology Challenges –Computing platforms and systems integration –Connectivity

7/2/2015NUCES-Islamabad14 Technology Challenges –Software Trying to merge databases from different countries can be quite troublesome because of the added layer of politics, traditions, and languages

7/2/2015NUCES-Islamabad15 Internet Population in Selected Countries Figure 15-5 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, Technology Challenges

7/2/2015NUCES-Islamabad16 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.

7/2/2015NUCES-Islamabad17 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

7/2/2015NUCES-Islamabad18 Total Cost of Outsourcing

7/2/2015NUCES-Islamabad19 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.

7/2/2015NUCES-Islamabad20 Suggested Reading Chapter 15 (Laudon & Laudon)