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Enterprise and Global Management of Information Technology

Business and IT
• As the 21st century unfolds, many companies are transforming themselves into global powerhouses via major investments in
– Global e-business – E-commerce – Other IT initiatives

• There is a need for business managers and professionals to understand how to manage this vital organizational function

Components of IT Management

Managing Information Technology
• Managing the joint development and implementation of business and IT strategies
– Use IT to support strategic business priorities – Align IT with strategic business goals

• Managing the development and implementation of new business/IT applications and technologies
– Information systems development

• Managing the IT organization and infrastructure
– Hardware, software, databases, networks, and other resources

Information Resource Management

Strategic Management

Operational Management

Resource Management

Technology Management

Distributed Management

Managing the IT Function
• Three things happened in the past few years
– The Internet boom inspired businesses to connect their networks – Companies on their intranets essential applications without which their businesses could not function – It became apparent that maintaining PCs on a network is very, very expensive

• These things created an urgent need for centralization

Organizing IT
• Early Years
– Centralization of computing with large mainframes

• Next
– Downsizing and moving back to decentralization

• Current
– Centralized control over the management of IT while serving the strategic needs of business units • Hybrid of centralized and decentralized components

Managing Application Development
• Application development management involves
– Systems analysis and design – Prototyping – Applications programming – Project management – Quality assurance – System maintenance

Managing IS Operations
• IS operations management is concerned with the use of hardware, software, network, and personnel resources in data centers • Operational activities that must be managed
– Computer system operations – Network management – Production control – Production support

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 – Product detailed statistics that are invaluable for effective planning and control of computing capacity

IT Staff Planning
• Recruiting, training and retaining qualified IS personnel • Evaluating employee job performance and rewarding outstanding performance with salary increases and promotions • Setting salary and wage levels • Designing career paths

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 all information technology planning and deployment – Manages the IT platform – Second in command

Technology Management
• All information technologies must be managed as a technology platform for integrating business applications
– Both internally or externally focused – The Internet, intranets, electronic commerce and collaboration technologies, CRM software, enterprise resource planning, and supply chain management

• Often the primary responsibility of a chief technology officer

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 Webenabled intranet help desks

• Key roles
– – – – Troubleshooting problems Gathering and communicating information Coordinating educational efforts Helping with end user application development


• The purchase of goods or services from third-party partners that were previously provided internally

Failures in IT Management
• IT not used effectively
– Computerizing traditional business processes instead of developing innovative e-business processes

• IT not used efficiently
– Poor response times – Frequent downtimes – Poorly managed application development

Global IT Management Dimensions

Global IT Management Challenges
• Political challenges
– Many countries regulate or prohibit the transfer of data across their national boundaries – Others severely restrict, tax, or prohibit imports of hardware and software – Some have 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 – Others require a business to spend part of the revenue they earn in a country in that nation’s economy

Global IT Management Challenges
• Geo-economic challenges
– Physical distances are still a major problem – It may take too long to fly in specialists – It is difficult to communicate in real time across 24 time zones – Many countries do not have good telephone and telecommunications services – It may be hard to find skilled local workers – There can be great differences in the cost of living and labor costs between countries

Global IT Management Challenges
• Cultural challenges
– Languages – Cultural interests – Religions – Customs – Political philosophies – Global IT managers need cultural training before they are sent on assignment – Different work styles and business relationships

Transnational Strategies
• Companies are moving toward a transnational strategy
– Business depends heavily on information systems and Internet technologies to help integrate global business activities – Requires an integrated and cooperative worldwide IT platform

Global Business Drivers
• Business requirements caused by the nature of the industry and its competitive or environmental forces • Examples of global drivers:
– – – – – Customers Products Operations Resources Collaboration

Global IT Platforms
• Hardware Difficulties
– High prices – High tariffs – Import restrictions – Long lead times for government approvals – Lack of local service or spare parts – Lack of documentation tailored to local conditions

Global IT Platforms
• Software Difficulties
– Packages developed in Europe may be incompatible with American or Asian versions – The software publisher may refuse to supply markets that disregard software licensing and copyright agreements

The Internet as a Global IT Platform
• The Internet
– An interconnected matrix that reaches tens of millions of users in over 100 countries – Business environment is free of traditional boundaries and limits

• Without incurring massive cost outlays for telecommunications, companies can
– Expand markets – Reduce communications and distribution costs – Improve profit margins

Global Data Access Issues
• Transborder Data Flows may be viewed as violating
– A nation’s sovereignty because it avoids customs duties and regulations – Laws protecting the local IT industry from competition – Laws protecting local jobs – Privacy legislation

Global Government Internet Restrictions
• High Government Access Fees
– Kazakhstan, Kyrgyzstan

• Government Monitored Access
– China, Iran, Saudi Arabia, Azerbaijan, Ubekistan

• Government Filtered Access
– Belarus, Cuba, Iraq, Tunisia, Sierra Leone, Tajikistan, Turkmenistan, Vietnam

• No Public Access Allowed
– Burma, Libya, North Korea

Global Systems Development
• Key development issues
– Conflicts over local versus global system requirements – Trying to agree on common system features – Disturbances caused by systems implementation and maintenance activities – Global standardization of data definitions

Systems Development Strategies
• Key strategies for global systems development
– Transform an application used by the home office or a subsidiary into a global application – Set up a multinational development team – Parallel development – Centers of excellence – Offshore development

Internet-Enabled IT Development

Supply Chain Management

What Is the Supply Chain? • Also referred to as the logistics network • Suppliers, manufacturers, warehouses, distribution centers and retail outlets – “facilities”
Suppliers Manufacturers Warehouses & Customers Distribution Centers

and the • Raw materials • Work-in-process (WIP) inventory • Finished products that flow between the facilities

Material Costs

Transportation Costs

Transportation Costs Transportation Manufacturing Costs Inventory Costs Costs

The Supply Chain – Another View








Warehouses & Distribution Centers


Material Costs

Transportation Transportation Costs Costs Transportation Manufacturing Costs Inventory Costs Costs

What Is Supply Chain Management (SCM)?






• A set of approaches used to efficiently integrate
– – – – – – – Suppliers Manufacturers Warehouses Distribution centers In the right quantities To the right locations And at the right time

• So that the product is produced and distributed

• System-wide costs are minimized and • Service level requirements are satisfied

Why Is SCM Difficult?
Plan Source Make Deliver Buy

• Uncertainty is inherent to every supply chain
– – – – Travel times Breakdowns of machines and vehicles Weather, natural catastrophe, war Local politics, labor conditions, border issues

• The complexity of the problem to globally optimize a supply chain is significant
– – – Minimize internal costs Minimize uncertainty Deal with remaining uncertainty

Benefits of Supply Chain Collaboration
CUSTOMERS MATERIAL SUPPLIERS • Reduced inventory • Lower warehousing costs • Lower material acquisition costs • Fewer stock out conditions SERVICE SUPPLIERS • Lower freight costs • Faster and more reliable delivery • Lower capital costs • Reduced depreciation • Lower fixed costs

• Reduced inventory • Increased revenue • Lower order management costs • Higher Gross Margin • Better forecast accuracy • Better allocation of promotional budgets

• Improved customer service • More efficient use of human resources

Electronic Data Interchange (EDI)

EDI: Electronic Data Interchange

• What is EDI?
– Exchange of electronic data between companies using precisely defined transactions – Set of hardware, software, and standards that accommodate the EDI process

Electronic Data Interchange

Benefits of EDI

Electronic Data Interchange

Suppliers, manufacturers, and retailers cooperate in some of the most successful applications of EDI.

Electronic Data Exchange

• How does EDI work?
– Supplier’s proposal sent electronically to purchasing organization. – Electronic contract approved over network. – Supplier manufactures and packages goods, attaching shipping data recorded on a bar code. – Quantities shipped and prices entered in system and flowed to invoicing program; invoices transmitted to purchasing organization

Electronic Data Exchange – Manufacturer ships order. – Shipment notice EDI transaction sent – Purchasing organization receives packages, scans bar code, and compares data to invoices actual items received. – Payment approval transferred electronically. – Bank transfers funds from purchaser to supplier’s account using electronic fund transfer (EFT).

Electronic Data Interchange

Electronic Data Interchange

• EDI Standards
– EDI requires companies to agree on standards • Compatible hardware and software • Agreed upon electronic form format – Established EDI standards • Automotive Industry Action Group (AIAG) • X.12 de facto umbrella standard in U.S. and Canada • EDI for Administration, Commerce, and Trade (EDIFACT) umbrella of standards in Europe

Electronic Data Interchange

• EDI on the Web
– Advantages of Web EDI
• Lower cost • More familiar software • Worldwide connectivity

– Disadvantages of Web EDI
• Low speed • Poor security

Electronic Data Interchange

• The Importance of EDI
– Need for timely, reliable data exchange in response to rapidly changing markets – Emergence of standards and guidelines – Spread of information into many organizational units – Greater reliability of information technology – Globalization of organizations

IS Architecture
Technology platform

Technology implementation plans

Data resources Investment plans Applications portfolio Business/IT Strategies

Organization transformation plans

IT organization

IS Architecture

• The major components of architecture are:
– Technology platform – Data resources – Applications portfolio – IT organization