Lecture 11 Managing Global Systems PDF

Lecture 11 BHMS4472 ICT in Business Managing Global Systems ICT (Information, Communication, and Technology) Learning Objectives What major factors are driving the internationalization of business? What are the...

Lecture 11 BHMS4472 ICT in Business Managing Global Systems ICT (Information, Communication, and Technology) Learning Objectives What major factors are driving the internationalization of business? What are the alternative strategies for developing global businesses? What are the challenges posed by global information systems and management solutions for these challenges? What are the issues and technical alternatives to be considered when developing international information systems? What Major Factors Are Driving the Internationalization of Business? Global economic system and global world order driven by advanced networks and information systems The growth of international trade has radically altered domestic economies around the globe For example, production of many high-end electronic products parceled out to multiple countries – For example: Apple iPhone’s global supply chain  Apple iPhone’s Global Supply Chain Copyright © 2022, 2020, 2018 Pearson Education, Ltd. All Rights Reserved Developing an International Information Systems Architecture Understand global environment – Business drivers for global competition – Inhibitors creating management challenges Develop corporate strategy for global competition Develop organizational structure and division of labour Consider management issues – Design of business procedures, reengineering, managing change Consider technology platform International Information Systems Architecture The Global Environment: Business Drivers and Challenges Business drivers – General cultural factors – Specific business factors Challenges – Global – Specific The Global Environment: Business Drivers and Challenges General Cultural Factors Specific Business Factors Global communication and Global markets transportation technologies Development of global culture Global production and operations Emergence of global social norms Global coordination Political stability Global workforce Global knowledge base Global economies of scale Challenges and Obstacles to Global Business Systems Global Specific Cultural particularism: Regionalism, Standards: Different Electronic Data nationalism, language differences Interchange (EDI), e-mail, telecommunications standards Social expectations: Brand-name Reliability: Phone networks not expectations, work hours uniformly reliable Political laws: Transborder data and Speed: Different data transfer speeds, privacy laws, commercial regulations many slower than United States Blank Personnel: Shortages of skilled consultants State of the Art Most companies have inherited a patchwork international system using traditional batch-oriented reporting, manual data entry, legacy systems, and little online control Significant difficulties in building appropriate international architectures – Planning a system appropriate to firm’s global strategy – Structuring organization of systems and business units – Solving implementation issues – Choosing right technical platform Global Strategies and Business Organization Three main kinds of organizational structure – Centralized: In the home country – Decentralized/dispersed: To local foreign units – Coordinated: All units participate as equals Four main global strategies – Domestic exporter – Multinational – Franchisers – Transnational Global Business Strategy and Structure Business Function Domestic Multinational Franchiser Transnational Exporter Production Centralized Dispersed Coordinated Coordinated Finance/accounting Centralized Centralized Centralized Coordinated Sales/marketing Mixed Dispersed Coordinated Coordinated Human resources Centralized Centralized Coordinated Coordinated Strategic Centralized Centralized Centralized Coordinated management Global Systems to Fit the Strategy Configuration, management, and development of systems tend to follow the global strategy chosen Four main types of system configuration 1) Centralized: Systems development and operation occur totally at the domestic home base 2) Duplicated: Development occurs at the home base, but operations are handed over to autonomous units in foreign locations 3) Decentralized: Each foreign unit designs its own solutions and systems 4) Networked: Development and operations occur in a coordinated fashion across all units Global Strategy and Systems Configurations Reorganizing the Business To develop a global company and information systems support structure: 1. Organize value-adding activities along lines of comparative advantage- o For example: Locate functions where they can best be performed, for least cost and maximum impact and reliability (with safeguards for supply chain resiliency) 2. Develop and operate systems units at each level of corporate activity regional, national, and international 3. Establish at world headquarters: o Single office responsible for the development of international systems o Global CIO position A Typical Scenario: Disorganization on a Global Scale Traditional multinational consumer-goods company based in United States and operating in Europe would like to expand into Asia World headquarters and strategic management in United States Separate regional, national production and marketing centers Foreign divisions have separate IT systems E-mail systems are incompatible Each production facility uses different ERP system, different hardware and database platforms, and so on Global Systems Strategy (1 of 2) Share only core systems – Core systems support functionality critical to the firm Partially coordinate systems that share some key elements – Do not have to be totally common across national boundaries – Local variation desirable Peripheral systems Need to suit local requirements only Global Systems Strategy (2 of 2) Define core business processes Identify core systems to coordinate centrally Choose an approach – Piecemeal and grand design approaches tend to fail Make benefits clear – Global flexibility – Gains in efficiency (but more emphasis now on supply chain resiliency) – Fixed costs amortized over a larger customer base; creates new economies of scale – Ability to optimize corporate funds over much larger capital base The Management Solution: Implementation (1 of 2) Agreeing on common user requirements – Short list of core business processes – Develop common language, understanding of common elements and unique local qualities Introducing changes in business processes – Success depends on legitimacy, authority, ability to involve users in change design process Coordinating applications development – Coordinate change through incremental steps – Reduce set of transnational systems to bare minimum Local, Regional, and Global Systems The Management Solution: Implementation (2 of 2) Coordinating software releases – Institute procedures to ensure all operating units update at same time Encouraging local users to support global systems – Cooptation: Bringing the opposition into design and implementation process without giving up control over direction and nature of the change o Permit each country unit to develop one transnational application o Develop new transnational centers of excellence Issues and Technical Alternatives When Developing International Information Systems (1 of 2) Computing platforms and systems integration – How new core systems will fit in with existing suite of applications developed around globe by different divisions – Standardization: Data standards, interfaces, software, and so on Connectivity – Internet does not guarantee any level of service – Many firms use private networks and VPNs – Low penetration of PCs, outdated infrastructures in developing countries Issues and Technical Alternatives When Developing International Information Systems (2 of 2) Software – Integrating new systems with old – Human interface design issues, languages Software localization – Converting software to operate in second language Most important software applications: – TPS and MIS – SCM, EDI, and enterprise systems – Collaboration tools, e-mail, videoconferencing Internet Population in Selected Countries 25