BHMS4472 ICT in Business Lecture 11

Lecture 11: BHMS4472 ICT in Business – Managing Global Systems

• The lecture covers managing global systems using ICT (Information, Communication, and Technology).
• Key learning objectives focus on international business factors, global business strategies, challenges of global information systems and management solutions and technical alternatives for international information systems.

What Major Factors Are Driving the Internationalization of Business?

• Global economic systems and global world order are driven by advanced networks and information systems.
• Growth of international trade has significantly altered domestic economies globally.
• Examples include the production of high-end electronic products like iPhones, which are parceled out to multiple countries (Apple iPhone’s global supply chain).

Apple iPhone's Global Supply Chain

• The graphic (a world map) shows the geographical spread and links of the parts of Apple’s supply chain. This includes manufacturing plants in countries including but not limited to the US, Germany, Italy/France, China, South Korea, and Japan.

Developing an International Information Systems Architecture

• Understanding global business drivers and inhibitors will create management challenges.
• Define a corporate global strategy for global competition.
• Develop and manage organizational structures and division of labour.
• Consider management issues, including business procedure design, reengineering, and managing change.
• Consider technical platforms.

International Information Systems Architecture

• Global environment: includes business drivers and challenges.
• Corporate global strategies
• Organization Structure
• Management and Business Processes
• Technology Platform

The Global Environment: Business Drivers and Challenges

• Business drivers include:
  • General cultural factors
  • Specific business factors
• Challenges include:
  • Global
  • Specific

The Global Environment: Business Drivers and Challenges - Specific and General Driver Examples

• General Cultural Factors: Global communication and transportation technologies, development of global culture and emergence of global social norms, political stability, and global knowledge base
• Specific Business Factors: Global markets, global production and operations, global coordination, global workforce, and global economies of scale

Challenges and Obstacles to Global Business Systems

• Global challenges include cultural particularism, regionalism, nationalism, language differences, social expectations, and Political laws.
• Specific Challenges include different electronic data interchange (EDI) standards, phone network reliability, data transfer speeds; shortages of skilled consultants.

State of the Art

• Most businesses have patchy international systems.
• Significant difficulty in building international architectures:
  • Planning systems appropriate to the firm's global strategy
  • Structuring organizational systems and business units
  • Solving implementation issues,
  • Choosing the right technical platform.

Global Strategies and Business Organization

• Organizational structures:
  • Centralized: based in the home country
  • Decentralized/ dispersed: to local foreign units
  • Coordinated: all units participate as equals
• Global strategies:
  • Domestic exporter
  • Multinational
  • Franchiser
  • Transnational

Global Business Strategy and Structure Matrix

• Table matrix showing how different business functions (production, finance/accounting, sales/marketing, human resources, strategic management) are managed under the different global strategies (domestic exporter, multinational, franchiser, transnational)

Global Systems to Fit the Strategy

• Configuration, management, and development of systems tends to follow the global strategy chosen.
• Types of system configurations for different global strategies:
  • Centralized: all processing occurs in home country
  • Duplicated: development is in home base but operations are in foreign countries.
  • Decentralized: each foreign unit designs its own systems
  • Networked: development and operations coordinated among all units.

Global Strategy and Systems Configurations Matrix

• Table comparing four different global strategies and the organizational structures/systems required for each.

Reorganizing the Business

• To develop a global company and information system support structure to achieve competitive advantage:
  • Organize value-adding activities along lines of comparative advantage, locating functions for lowest cost and maximum reliability.
  • Develop and operate systems units at regional, national and international levels
  • Establish world headquarters with a global CIO and a single office for transnational system development.

A Typical Scenario: Disorganization on a Global Scale

• A traditional multinational consumer goods company that expands into Asia, but with separate IT systems for different business units (production, marketing) and country divisions, and incompatible systems and different systems and hardware.

Global Systems Strategy

• Share only core systems.
• Partially coordinate systems with some key elements (not necessary for all elements to be the same across national boundaries).
• Peripheral systems must suit local requirements only.

Global Systems Strategy (Continued)

• Define core business processes.
• Identify core systems to be coordinated centrally.
• Choose a system integration approach (piecemeal or comprehensive design).
• Make benefits clear (for global flexibility, greater efficiency, significant cost efficiencies)
• Supply chain resiliency is increasingly important consideration.

The Management Solution: Implementation

• Agreeing on common user requirements(Short-list of core business processes, Develop common language, Unique local qualities)
• Introducing changes in business processes(Success depends on legitimacy, authority, change design process).
• Coordinating applications development( Coordinate change through increments, Reduce transnational system set).

Local, Regional, and Global Systems

• Diagram illustrating interconnected relationships between various levels of business systems (local, regional, global).
• Focus on geographic business scope and business system scope.

The Management Solution: Implementation (Continued)

• Coordinating software releases (institute procedures for concurrent updates across all operating units.)
• Encouraging local users to support global systems (Cooptation, allow each country unit to develop a transnational application, establish new centres of excellence).

Issues and Technical Alternatives When Developing International Information Systems

• Computing platforms and systems integration (how new core systems fit in existing applications, standardization of data standards, interfaces, software)
• Connectivity(Internet service reliability, private networks/VPNs, infrastructure in developing countries.)
• Software (Integrating new systems with old systems, human interface design issues, language support, localization).
• Important software applications (TPS, MIS, SCM, EDI, enterprise systems, collaboration tools, e-mail, videoconferencing).

Internet Population in Selected Countries

• Graph showing varying internet penetration rates across different countries (Norway, U.S.A., Peru, China, Egypt, Pakistan, Somalia). Significant variation observed.