CHAPTER 12
Enterprise and Global Management of
Information Technology
Learning Objectives
1.
2.
3.
Identify each of the three components of information
technology management, and 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 geoeconomic
challenges that confront managers in the management
of global information technologies.
Learning Objectives
4.
5.
6.
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.
Case 1: Hewlett-Packard: Managing Radical
Change in IT to Support New Business Goals
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It is important for CIOs to understand not only the technology
and how it could be used to improve a business but also how to
deliver those benefits.
Companies like Hewlett-Packard face major challenges when
implementing changes to make the IT function more efficient and
vital contributor to their business success.
Radical changes suggested by the CIO of HP, Randy Mott can
lead to thousands of layoffs and changes in their culture.
If these changes are not managed properly, it could lead to a
disaster.
Case Study Questions
1.
2.
Will the initiatives being undertaken by CIO Randy
Mott to implement major changes to the IT function at
HP make IT a more efficient and vital contributor to
HP’s business success? Defend your position on each of
the major initiatives he is implementing.
Do you approve of the change management job Mott
is doing, including his meetings with HP employees
throughout the world and having “coffee talks” with
them? Why or why not?
Case Study Questions
3.
Assume you have been hired as a management
consultant or coach to CIO Mott. What are several
suggestions you might give him to help him
successfully implement his ambitious plans for IT
changes at HP? Defend your proposals.
Real World Internet Activity
1.
Use the Internet to discover the current financial
performance of HP and determine if HP’s major
changes and spending on IT are being viewed as
a positive or negative contributor to its
performance. Then investigate HP’s competitive
performance in market share, units sold, and other
areas compared with Dell, Leveno, Sun, IBM, and
any other competitors you find, as well as the
reasons given for HP’s current competitive stance.
Real World Group Activity
2.
Implementing major changes as CIO Mott is doing
causes many employees to lose their jobs and
much angst on the part of some of those who
remain, whose jobs and work styles may also
change.

Discuss how you would handle a change management
process at HP or any other company faced with
implementing similar decisions.
Components of IT Management
Managing Information Technology

Managing the joint development and implementation of
business and IT strategies
Use IT to support the strategic business priorities
 Align IT with strategic business goals

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Managing the development and implementation of new
business/IT applications and technologies
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Managing information systems development
Managing the IT organization and IT infrastructure

Hardware, software, database, networks and other resources
Business/IT Planning Process
Components of Business/IT Planning

Strategy Development
 Developing
business strategies that support a company’s
business vision

Resource Management
 Developing
strategic plans for managing or outsourcing
a company’s IT resources

Technology Architecture
 Making
strategic IT choices that reflect an information
technology architecture designed to support a
company’s business/IT initiatives
Information Technology Architecture

Technology Platform
 Networks,
computer systems, system software and
integrated enterprise application software

Data Resources
 Operational
and specialized databases
 Store and provide data and information for business
processes and decision support
Information Technology Architecture

Applications Architecture
 Integrated
architecture of enterprise systems that
support strategic business initiatives as well as crossfunctional business processes

IT Organization
 Organizational
structure of the IS function within a
company and the distribution of IS specialists
Organizing IT

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Early years: centralization of computing with large
mainframes
Next: downsizing trend with a move back to
decentralization
Current: centralized control over the management
of IT while serving strategic needs of business units
 Hybrid
of both centralized and decentralized
components
Organizational Components of IT at
Avnet Marshall
Application Development
Management

Managing activities such as:
 Systems
analysis and design, prototyping, applications
programming, project management, quality assurance,
and system maintenance for all major business/IT
development projects
IS Operations Management

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Use of hardware, software, network, and personnel
resources in the corporate or business unit data
centers of an organization
Includes computer systems operations, network
management, production control and production
support
Data centers are the computer centers of an
organization
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, and
 Produce detailed statistics that are invaluable for
effective planning and control of computing capacity
Features of Systems Performance Monitors

Chargeback Systems
 Allocate
costs to users based on the information services
rendered

Process Control Capabilities
 Systems
that not only monitor but automatically control
computer operations at large data centers
IT Staff Planning

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Recruiting, training and retaining qualified IS
personnel
Evaluate employee job performances and reward
outstanding performances with salary increases and
promotions
Set salary and wage levels and design career paths
so individuals can move to new jobs through
promotion and transfer as they gain in seniority and
expertise
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 technology management: all information
technology planning and deployment
 Managing the IT platform
 Second in command
Managing User Services

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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
Outsourcing

The purchase of goods or services from third-party
partners that were previously provided internally
Outsourcing’s Top Ten
Why outsource?

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Save money – achieve greater ROI
Focus on core competencies – organization can focus
on the business that they are in
Achieve flexible staffing levels
Gain access to global resources
Decrease time to market
Offshoring


Relocation of an organization’s business processes
To a lower-cost location, usually overseas
IT Management Failures

IT not used effectively
 Computerize
traditional business processes
 Instead of developing innovative e-business processes

IT not used efficiently
 Poor
response times and frequent downtimes
 Poorly managed application development projects
Management Involvement and
Governance

Managerial and end user involvement
 Key
ingredient to high-quality information systems
performance

Involve managers in the management of IT
 Governance
structures such as steering committees
Senior management’s involvement in business/IT
decisions
Case 2: IBM Corporation: Competing
Globally by Offshoring IT Workers and
Giving Away Technology
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IBM is expanding their development centers in India to compete
with companies like Wipro, Infosys, and TCS.
IBM is also giving away technology and its intellectual property
to expand its business.
According to Fortune magazine, IBM gives away at least $150
million worth of technology every year.
The idea that giving things away makes the pie bigger for
everybody is being embraced by IBM.
When IBM gives away free tools, it often sells additional
software and consulting services.
As long as IT remains hard to use, expensive, and labor
intensive, with customers continuing to need help solving business
problems, IBM will have the opportunity to thrive.
Case Study Questions
1.
2.
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? Why or why
not?
Will IBM’s plan to give away some of its IT assets and
intellectual property and increase its support of opensource
software products like Linux be a successful growth strategy in
the “brutally competitive marketplace” in which it operates?
Why or why not?
Case Study Questions
3.
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 a long time to
come? Should IBM bet its business on that
assumption? Defend your answers to both
questions.
Real World Internet Activity
1.
Use the Internet to research news on the latest
developments in the competition to provide IT
consulting services to businesses and governments.
Check out IBM’s performance, as well as major
players like HP and Accenture, new entrants like
Dell, and international competitors like Wipro.
Who appears to be winning or losing in this
arena? What reasons can you uncover for the
results you find?
Real World Group Activity
2.
IBM eliminated 14,500 jobs, mostly in Europe, and
then reportedly hired thousands of additional IT
workers in India. Such cutting of high-cost jobs and
offshoring jobs to a subsidiary in a lower-cost
country is a controversial business strategy being
used by other global companies.

Discuss the implications of this issue for your current or
future career choices and the kinds of companies or
organizations you would want to work for.
Global IT Management

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

Develop appropriate business and IT strategies for
the global marketplace
Develop the portfolio of business applications
needed to support business/IT strategies
Determine the technology platform needed
Determine the systems development projects that
will produce the required global information systems
Global IT Management Dimensions
Global IT Management Challenges
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
Political
Geoeconomic – effects of geography on the
economic realities of international business activities
Cultural
Political Challenges
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Rules regulating or prohibiting transfer of data
across national boundaries
Severely restricted, taxed, or prohibited imports of
hardware and software
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
Reciprocal trade agreements that require a business
to spend part of the revenue they earn in a country
in that nation’s economy
Geoeconomic Challenges
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Sheer physical distances
Difficult to get good-quality telephone and
telecommunications services
Differences in the cost of living and labor costs
Cultural Differences
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Languages
Cultural Interests
Religions
Customs
Social Attitudes
Political Philosophies
Transnational Strategies
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Business depends heavily on its information systems
and Internet technologies to help integrate global
business activities
Develop an integrated and cooperative worldwide
IT platform
Transnational Business/IT strategies
Global Business Drivers

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Business requirements caused by the nature of the
industry and its competitive or environmental forces
Examples of drivers:
 Global
Customers
 Global Products
 Global Operations
 Global Resources
 Global Collaboration
Global IT Platform


Managing the hardware, software, data resources,
telecommunications networks, and computing
facilities that support global business operations
Technically complex with major political and cultural
implications
International Data Communications Top 10 Issues
Internet as a Global IT Platform
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Technology platform free of many traditional
international boundaries and limits
Expand markets, reduce communications and
distribution costs, and improve profit margins without
massive cost outlays for telecommunications
Key Questions for Global Websites

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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?
Key Questions for Global Websites
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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?
Internet Users by World Region
Global Data Access Issues

Transborder Data Flows
 Business
data flow across international borders over the
telecommunications networks of global information
systems
 May be viewed as violating a nation’s sovereignty
because avoids custom duties
 Or violating their laws to protect local IT industry from
competition or their labor regulations for protecting local
jobs
U.S.-E.U Data Privacy Requirements
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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
Internet Access Issues in Most Restrictive Countries
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High Government Access Fees
Government Monitored Access
Government Filtered Access
No Public Access Allowed
Global Systems Development
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Conflicts over local versus global system
requirements
Difficulties in agreeing on common system features
Disturbances caused by systems implementation and
maintenance activities
Global standardization of data definitions
Systems Development Strategies
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Transform an application used by the home office
into a global application
System used by a subsidiary that has the best
version of an application will be chosen for global
use
Set up a multinational development team with key
people from several subsidiaries to ensure that the
system design meets the needs of local sites as well
as corporate headquarters
Systems Development Strategies
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Parallel Development – parts of the system are
assigned to different subsidiaries and the home
office to develop at the same times based on the
expertise and experience at each site
Centers of Excellence – an entire system may be
assigned for development to a particular subsidiary
based on their expertise in the business or technical
dimensions needed for successful development
Offshore Development – outsource the development
work to a global development company
Internet-enabled Collaboration in IT Development
Source: Adapted from Jon Udell, “Leveraging a Global Advantage,” Infoworld, April 21, 2003, p. 35.
Case 3: Northwestern Mutual Life, GE,
and Boeing: The Business Challenges of
Outsourcing
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Outsourcing of IT services provides cost savings.
Financial-services companies like Northwestern Mutual Life
can cut the cost of IT work by 39 percent by outsourcing it to
vendors in low-cost countries.
Companies that are outsourcing their IT services have to
manage many challenges.
Key challenges are: privacy, security, and effective
management of the outsourcing relationship.
Key issues to successful outsourcing are often unique to the
company and its needs.
Case Study Questions
1.
2.
3.
The law does not require 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? Why or why not?
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?
Real World Internet Activity
1.
Each of the companies in the case shares a common
goal but from a different perspective. As we learned
in the chapter, there are a variety of reasons a
company may choose to outsource. Using the Internet
and Figure 12.6 as your guide, see if you can find
examples of companies that have chosen to
outsource for reasons different from the three outlined
in the case. What were their reasons?
Real World Group Activity
2.
Outsourcing and offshoring are controversial issues—
particularly when it comes to jobs.
 Discuss the pros and cons of this issue.
 Should we curtail outsourcing and offshoring to
protect jobs?
 Are new jobs being created to replace the ones lost?