Chapter 12
Enterprise and Global
Management of
Information Technology
©2008,The McGraw-Hill Companies, All Rights Reserved
Learning Objectives
1. Identify each of the three components of
information technology management, and use
examples to illustrate how they might be
implemented in a business.
2. Explain how failures in IT management can be
reduced by the involvement of business
managers in IT planning and management.
3. Identify several cultural, political, and
geoeconomic challenges that confront
managers in the management of global
information technologies.
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Learning Objectives
4. Explain the effect on global business/IT strategy of the
trend toward a transnational business strategy by
international business organizations.
5. Identify several considerations that affect the choice of
IT applications, IT platforms, data access policies, and
systems development methods by a global business
6. 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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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 the strategic business priorities
– Align IT with strategic business goals
• Managing the development and implementation
of new business/IT applications and technologies
– Managing information systems development
• Managing the IT organization and IT
– Hardware, software, database, networks and other
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Business/IT Planning Process
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Components of Business/IT
• 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
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Information Technology
• 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
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Information Technology
• 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
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Organizing IT
• Early years: centralization of computing with
large mainframes
• Next: downsizing trend with a move back to
• Current: centralized control over the
management of IT while serving strategic needs
of business units
– Hybrid of both centralized and decentralized
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Organizational Components of IT
at Avnet Marshall
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Application Development
• 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
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IS Operations Management
• 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
• Data centers are the computer centers of an
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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, and
– Produce detailed statistics that are invaluable for
effective planning and control of computing capacity
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Features of Systems Performance
• 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
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IT Staff Planning
• Recruiting, training and retaining qualified IS
• 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
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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 technology management: all information
technology planning and deployment
– Managing the IT platform
– Second in command
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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
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• The purchase of goods or services from thirdparty partners that were previously provided
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Outsourcing’s Top Ten
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Why outsource?
• 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
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• Relocation of an organization’s business
• To a lower-cost location, usually overseas
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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
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Management Involvement and
• Managerial and end user involvement
– Key ingredient to high-quality information systems
• Involve managers in the management of IT
– Governance structures such as steering committees
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Senior management’s involvement in
business/IT decisions
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Global IT Management
• 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
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Global IT Management
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Global IT Management
• Political
• Geoeconomic – effects of geography on the
economic realities of international business
• Cultural
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Political Challenges
• 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
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Geoeconomic Challenges
• Sheer physical distances
• Difficult to get good-quality telephone and
telecommunications services
• Differences in the cost of living and labor costs
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Cultural Differences
• Languages
• Cultural Interests
• Religions
• Customs
• Social Attitudes
• Political Philosophies
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Transnational Strategies
• Business depends heavily on its information
systems and Internet technologies to help
integrate global business activities
• Develop an integrated and cooperative
worldwide IT platform
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Transnational Business/IT
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Global Business Drivers
• Business requirements caused by the nature of
the industry and its competitive or environmental
• Examples of drivers:
– Global Customers
– Global Products
– Global Operations
– Global Resources
– Global Collaboration
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Global IT Platform
• Managing the hardware, software, data
resources, telecommunications networks, and
computing facilities that support global business
• Technically complex with major political and
cultural implications
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International Data Communications
Top 10 Issues
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Internet as a Global IT Platform
• 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
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Key Questions for Global
• 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?
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Key Questions for Global
• 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
– Business data flow across international borders over
the telecommunications networks of global information
– 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
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U.S.-E.U Data Privacy Requirements
• 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 Issues in Most
Restrictive Countries
• High Government Access Fees
• Government Monitored Access
• Government Filtered Access
• No Public Access Allowed
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Global Systems Development
• Conflicts over local versus global system
• Difficulties in agreeing on common system
• Disturbances caused by systems implementation
and maintenance activities
• Global standardization of data definitions
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Systems Development Strategies
• 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
• 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
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Systems Development Strategies
• 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
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Internet-enabled Collaboration in IT
Source: Adapted from Jon Udell, “Leveraging a Global Advantage,” Infoworld, April 21, 2003,
12- p.
Case 1: Hewlett-Packard: Managing
Radical Change in IT to Support New
Business Goals
• 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
• If these changes are not managed properly, it could lead
to a disaster.
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Case Study Questions
1. 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.
2. 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
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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.
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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
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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.
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Case 2: IBM Corporation: Competing
Globally by Offshoring IT Workers and
Giving Away Technology
• 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.
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Case Study Questions
1. 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?
2. 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?
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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.
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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?
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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.
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Case 3: Northwestern Mutual Life,
GE, and Boeing: The Business
Challenges of Outsourcing
• 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.
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Case Study Questions
1. 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?
2. What is meant by the term “best-of-breed model”?
Why has this approach worked for Boeing?
3. GE wants to outsource its entire ERP system
based, in part, on its successes with other
outsourcing projects. Is it possible to outsource too
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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?
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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
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Intro to Information Systems