Chapter 14 Enterprise and

Global Management of
Information Technology
James A. O'Brien, and George Marakas.
Management Information Systems with MISource
2007, 8th ed. Boston, MA: McGraw-Hill, Inc.,
2007. ISBN: 13 9780073323091
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
 Identify several cultural, political, and geo-
economic challenges that confront managers in
the management of global IT

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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
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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 Alternative Governance
Models
 The management of IT falls into five major governance
decision areas: IT principles, IT architecture, IT
infrastructure, business application needs, and prioritization
and investment decisions
 How companies organize their business and IT
management teams to make such decisions varies widely
 UPS’s IT Governance
 An IT steering committee
 An IT governance committee
 A formal “charter” process: winnows down IT project
proposals to those best aligned with strategic objectives
 An escalation process to handle exceptions to
architecture standards
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Case 1 Alternative Governance
Models
 Manheim Interactive
 Like most high-growth start-ups, the company did not
tightly govern its IT architecture or infrastructure
 The focus on speed of IT delivery was unsustainable as
the online business matured
 IT governance has now transitioned to a blend of
centralized and decentralized arrangements
 JPMorgan Chase
 Encourages autonomy to generate innovation and
recognize the very different requirements of its
businesses
 The company encourages the use of standardized
technologies where they can provide economies of scale
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Case 1 Alternative Governance
Models
 ING Direct
 The company is organized into nine country-based
businesses
 Each country operates autonomously, but the units
share a common business model
 Business solutions, IT technical components, and the
infrastructure as standardized
 A council comprised of CIOs and COOs
makes enterprisewide principles, architecture,
infrastructure, and investment decisions

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Case Study Questions
 Is there a need for different IT governance arrangements among
companies?
 Why or why not?
 Use UPS, JPMorgan Chase, and ING Direct as examples to
defend your answer
 Should the IT governance of an e-commerce start-up like Manheim
Online differ from that used by its parent company, as Manheim
Auctions was in this case?
 Should the IT governance of an e-commerce venture change
over time, as occurred with Manheim Online?
 The five major governance decision areas outlined in the case tell
us a lot about what is involved in the management of IT
 Which of the decision areas should primarily be the province of
the business management of the company?
 Which should primarily be the responsibility of IT management?
 Should all decisions be made jointly by both management
groups?
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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
 IS development
 Managing the IT organization and infrastructure
 Hardware, software, databases, networks, and
other resources
 Comparing IT Management Approaches - See
Figure 14.3
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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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Outsourcing’s Top Ten

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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 organization’s 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. Management’s Involvement in IT

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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

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Case 2 Offshoring & Giving
Away Technology
 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

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Case Study Questions
 Do you agree with IBM’s employment response to
competition from software development contractors in
India like Wipro that are expanding into IT consulting
services?
 Will IBM’s 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?
 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?

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Global IT Management
Dimensions

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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 nation’s
economy
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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

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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
 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
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International Data
Communications Issues

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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?
 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 you’ll 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

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Global Data Access Issues
 Transborder Data Flows may be viewed as
violating
 A nation’s 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 country’s
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

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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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Case 3 Thinking & Acting Globally
 Globalization means different things to different people
 There’s no single method for how it operates
 Too often, strategic motivations for globalization aren’t matched
by operational approaches to meet enterprise needs
 Operating globally means striking a balance between central and
local control of operations
 To ensure that IT-globalization decisions match the enterprises core
needs and approaches
 Determine the balance of global integration versus local
responsiveness
 Align IT’s major processes with the enterprise’s governance
orientation
 Assign staff, roles, and competencies appropriately
 Other issues to consider
 The diversity of countries in which the company operates
 The IT maturity in these countries

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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 CEO manage the requirement to
both globalize and localize the IT function?

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Case 4 The Hard Road to
Outsourcing
 Outsourcing IT work abroad can cut the cost of
IT by 39 percent
 It carries privacy risks
 It threatens U.S. jobs

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Case Study Questions
 The law does not provide for companies to
disclose to their customers that they have
outsourced or offshored access to their data
 Is this a potential problem for either the
company or the customer?
 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?

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