Horizon e-Learning Center

Course: Introduction to Management Systems

Lesson Topic: Managing Global Systems

4.1.        THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS

4.1.1.             Global Product Development and Production

4.1.2.             Developing an International Information Systems Architecture

•        International information systems architecture

•        The basic information systems required by organizations to coordinate worldwide trade and other activities

•        Business driver

•        A force in the environment to which businesses must respond and that influences the direction of the business

4.1.3.             International Information Systems Architecture

4.1.4.             The Global Environment: Business Drivers and Challenges

Two groups of global business drivers

1. General cultural factors

–       Global communication and transportation technologies

–       Development of global culture

–       Emergence of global social norms

–       Political stability

–       Global knowledge base

2. Specific business factors

–       Global markets

–       Global production and operations

–       Global coordination

–       Global workforce

–       Global economies of scale

Business Challenges: General

–       Cultural particularism: Regionalism, nationalism, language differences

–       Social expectations: Brand-name expectations, work hours

–       Political laws: Transborder data and privacy laws, commercial regulations

Business Challenges: Specific

–       Standards: Different Electronic Data Interchange (EDI), telecommunications standards

–       Reliability: Phone networks not uniformly reliable

–       Speed: Different data transfer speeds, many slower than Canada

–       Personnel: Shortages of skilled consultants

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4.2.        ORGANIZING INTERNATIONAL INFORMATION SYSTEMS

4.2.1.             Global Strategies and Business Organization

Three kinds of organizational structure:

•        Centralized (in the home country)

•        Decentralized (to local foreign units)

•        Coordinated (all units participate as equals)

Domestic exporter strategy

•        Heavy centralization of corporate activities in the home country of origin

Multinational strategy:

•        Centralized financial management and control while decentralizing production, sales, and marketing operations to units in other countries

Franchisers

•        Product is financed and initially produced in the home country, but for product-specific reasons rely on foreign personnel for further production, marketing, and human resources

Transnational strategy:

•        The value-adding activities are managed from a global perspective without reference to national borders, optimizing sources of supply and demand wherever they appear, and taking advantage of any local competitive advantages

4.2.2.             Global Strategy and Systems Configurations

4.2.3.             Global Systems to Fit the Strategy

Four types of systems configuration

1. Centralized systems: Systems development and operation occur totally at the domestic home base
2. Duplicated systems: Development occurs at the home base but operations are handed over to autonomous units in foreign locations
3. Decentralized systems: Each foreign unit designs its own unique solutions and systems.
4. Networked systems: Systems development and operations occur in an integrated and coordinated fashion across all units

4.2.4.             Reorganizing the Business

To develop a global company and information systems support structure:

1. Organize value-adding activities along lines of comparative advantage
2. Develop and operate systems units at each level of corporate activity —regional, national, and international
3. Establish a single office at world headquarters and a Chief Information Officer (CIO)

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4.3.        MANAGING GLOBAL SYSTEMS

4.3.1.       Management Challenges in Developing Global Systems

•        Agreeing on common user requirements

•        Introducing changes in business processes

•        Coordinating applications development

•        Coordinating software releases

•        Encouraging local users to support global systems

4.3.2.             Global Systems Strategy

•        Define the core business processes:

–       Conduct workflow analysis, identify centres of excellence for these processes

•        Identify the core systems to coordinate centrally:

–       Conquer the core systems and define these systems as truly transnational

•        Choose an approach:

–       Incremental, Grand Design, Evolutionary

•        Make the Benefits Clear

4.3.3.             Local, Regional, and Global Systems

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4.4.        TECHNOLOGY ISSUES AND OPPORTUNITIES FOR GLOBAL VALUE CHAINS

4.4.1.             Global Systems Technology Challenges

Computing platforms and systems integration

•        Develop global, distributed, and integrated systems to support digital business processes spanning national boundaries

•        Use of same hardware and operating system does not guarantee integration.

•        Establish data and technical standards

Connectivity

•        Overcoming disparate national technical standards, data exchange restrictions and service levels

•        User of Internet technology to create global intranets, extranets, virtual private networks (VPNs)

Computing platforms and systems integration

•        Develop global, distributed, and integrated systems to support digital business processes spanning national boundaries

•        Use of same hardware and operating system does not guarantee integration.

•        Establish data and technical standards

4.4.2.             Internet Population in Selected Countries

4.4.3.             Internet Translation Tools

4.4.4.             Managing Global Software Development

Offshore software outsourcing

•        Outsourcing portions of new systems like development work or maintenance of existing systems to external vendors in another country

Major cost components of offshore software development

1. Contract cost
2. Vendor selection costs
3. Transition management and knowledge transfer costs
4. Domestic human resources costs
5. Costs of improving software development processes
6. Costs of adjusting to cultural differences
7. Cost of managing an offshore contract

4.4.5.             Total Cost of Outsourcing

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4.5.        MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS

4.5.1.             Management Opportunities

Ability to lower costs through global scale economies by building international systems for producing and selling goods and services in different regions of the world

4.5.2.             Management Challenges

Finding the right global business strategy

Difficulties of managing change in a multicultural firm

Difficulties of achieving global connectivity and integration

4.5.3.             Solution Guidelines

•        Agreeing on common user requirements

•        Introducing changes in business processes

•        Coordinating applications development

•        Coordinating software releases

•        Encouraging local users to support global systems

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                                                                             Last Updated: 27 Nov 2006 11:17 AM