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Managing global systems Think global Act local DHL builds a global IT organization Overnight and express package deliveries Serving 140,000 destinations in over 220 countries 4,400 local offices 238 gateways 450 hubs, warehouses 4.2 millions customers Employ 170,000 people

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Managing global systems

Think global

Act local


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  • DHL builds a global IT organization

    • Overnight and express package deliveries

      • Serving 140,000 destinations in over 220 countries

      • 4,400 local offices

      • 238 gateways

      • 450 hubs, warehouses

      • 4.2 millions customers

      • Employ 170,000 people

      • More than 400 aircrafts


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  • Challenges

    • Keep track of its own operations

    • Customer packages


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  • Act local

    • Customer & employee would see information in

      • Local language

      • Important country regulations

  • Think global

    • DHL can check on status and location of any package around the world

    • Info is current & accurate


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  • Original IT design

    • 50 data centers in each major countries

      • Coordinate loosely

        • Common set of core database application

      • Info exchanged on a messaging and communication network

    • Operate well until traffic volume expanded


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  • Maintain 50 data centers to a single standard was difficult

    • Raise cost

    • Slow down changes

      • Upgrades has to deploy in 50 different countries

      • Take more than 18 months to complete

  • “info is more important than the package”

    • Customer might understand package lost due to hurricane

    • Customer is intolerable to failure of tracking


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  • New configuration

    • Global computing infrastructure

      • 3 low-cost, regional global centers

    • Outsourcing software

      • Initially

        • India software company

      • Changed

        • Design: USA

        • Implementation & execution: India


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  • Benefits

    • Cost

      • Maintain IT infrastructure fallen by 40%

    • Deploy new software

      • In hours (not months)

    • Simplify management communication


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15.1 The growth of international info systems

15.2 Organizing international info systems

15.3 Managing global systems

15.4 Technology issues & opportunities for global value chains


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15.1 Growth of international IS

  • Advanced networks & info systems

    • Global economic system

    • International trade

      • 22% of US economy

      • 1/3 of the world’s total GDP


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  • Understand global environment

    • Business drivers

      • Force in the environment which business must respond

        • Global competition

        • Global funds

    • Challenges

      • Inhibitors or negative factors

        • 民族主義 (伊朗、玻利維亞…)

        • 箝制言論自由


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  • Corporate strategy to compete

    • Ignore global market

      • Focus on domestic markets

    • Sell to globe from a domestic base

    • Organizing production & distribution around the globe

  • Structure of organization

    • Division of labor across a global environment

    • Where to locate

      • Production, administration, …..


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  • Management issues

    • Business processes

      • How can you reengineer on a global scale

  • Technology platform

    • Choose the right technology to support business processes


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  • The global environment:

    Business drivers & challenges

    • Business drivers

      • General culture factors

        • Global village

          • Telecommunication & transportation technology

            Communicate around the globe

            Communication to next block

            moving goods & service


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  • Global culture

    • Common expectations

      right & wrong

      desirable & undesirable

      heroic & cowardly

    • Created by TV, Internet, Movie …

  • Global knowledge base

    used to be

    • Developed countries

      US, western Europe, Japan

    • Third world

  • Now, 金磚四國,四小龍


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  • Specific business factor

    • Global market

      • Coca-cola, American sneakers, CNN

    • Global production & operation

      • Location of business activities according comparative advantage

    • Global coordination

    • Global workforce

    • Global economies of scale

  • Manufacturing has been much more affected than services


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    • Business challenges of globalization

      • Particularism

        • Making judgment and taking action on the basis of narrow or personal characteristics

          • Religious

          • Nationalistic

          • Ethnic

          • Regionalism

          • Geopolitical


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    • Made in USA

      • Found most of goods are foreign made

    • European countries prohibit processing financial information outside their border

    • National laws impact the profit and loss are analyzed

      • 員工分股費用化

    • Currency fluctuation


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    15.1 The growth of international info systems

    15.2 Organizing international info systems

    15.3 Managing global systems

    15.4 Technology issues & opportunities for global value chains


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    15.2 organizing international IS

    • Global strategies & Business organization

      • Four main global strategies

        • Domestic exporter

        • Multinational

        • Franchiser

        • transnational

    • Three organizational governance

      • Centralized

      • Decentralized

      • Coordinated


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    • Domestic exporter

      • Heavy centralization of corporate activities in the home country

      • International sales are sometime dispersed

        • Ex: movie industry

    • Multinational

      • Centralized: financial control, …

      • Decentralized: production, sales and marketing, …

        • Ex: General Motors, 香港-利豐


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    • Franchise

      • Product is created, designed, financed, and initially produced in the home country

      • Product-specific reasons must be rely heavily on foreign personnel

        • Ex: McDonald’s

    • Transnational

      • No single national headquarters

      • Many regional headquarters

        • Ex: Citicorp


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    • Forces for

      • Decentralization

        • Protectionism

        • Serve local markets better

      • Centralization

        • Economies of scale

        • Power & authority


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    • Global systems to fit the strategy

      • Centralized systems

        • Systems development and operation

          • Domestic home base

      • Duplicated systems

        • Development at home base

        • Operations over foreign location

      • Decentralized systems

        • Each foreign units design its own unique solution


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    • Networked systems

      • Systems development & operations in an integrated & coordinated fashion


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    • Reorganizing the business

      principles

      for developing global info systems

      • Organizing value-adding activities along lines of comparative advantage

        • Located where they can best be performed


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    • World headquarter activity

      • Office responsible for development of international systems


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    15.1 The growth of international info systems activity

    15.2 Organizing international info systems

    15.3 Managing global systems

    15.4 Technology issues & opportunities for global value chains


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    15.3 managing global systems activity

    • Disorganization on a global scale

      • Multinational companies

        • Dispersed production & marketing

          • Regional & national center

        • Centrally financial control

          • World headquarter


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    • Challenges activity

      • Resistance the efforts to agree on common user requirement

        • Local needs vs. central interest

      • Change local procedures to align other units

        • Might interfere local performance

      • Difficult to coordinate development across the globe



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    Global systems strategy activity(步驟 1)

    • Define the core business processes

      • Identify & set priority of a list of critical core business processes

        • Communicate & coordinate

          • Work

          • Information

          • Knowledge

        • Conduct business process analysis

          • How are orders taken?

          • How are they shipped?


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    Global systems strategy activity(步驟 2)

    • Identify the core systems to coordinate centrally

      • Identify a list of core systems to an absolute minimum

      • Dividing off a small group of systems as absolutely critical

        • Divide opposition


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    Global systems strategy activity(步驟 3)

    • Choose an approach:

      Incremental, Grand design, Evolutionary

      • Avoid

        • Piecemeal approach

          • Lack of visibility

          • Lack of power to convince senior management

        • Grand design

          • Require huge resources

          • Nothing get done properly

      • Evolve translational applications incrementally

        • Precise & clear vision of the transnational capability


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    Global systems strategy activity(步驟 4)

    • Make the benefits clear

      Global systems’ contributions

      • Contribute to superior management & coordination

        • Ability to switch suppliers

        • Ability to move production

        • Ability to use excess capacity

      • Vast improvement in production, operation, and supply and distribution

        • Locate value-adding activities to most economical region


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    • Global customers & global marketing activity

      • Unleash new economies of scale

    • Ability to optimize the use of corporate funds

      • Capital in surplus region can be moved efficiently

      • Cash can be managed more effectively


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    • The management solution activity

      to problems of developing the global IS

      • Agreeing on common user requirements

        • Establishing short list of

          • Core business process

          • Core support systems

        • Process of rational comparison

        • Develop a common language for discussing


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    • Select a viable change strategy activity

      Introducing changes in business process

      • Evolutionary but with a vision

      • Convincing others that changes is feasible & desirable

      • Assure others that change is in the best interests of company & their units

  • Coordinating applications development

    • making incremental steps toward a larger vision

      • easier to coordinate


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    • Encouraging local users to support global systems activity

      • Dealing resistance from local units

        • Cooptation (抽選、 統整合作)

          • Bring the opposition into

            the process of designing

          • Implementing the solution

            without giving up control over

            the direction and nature of change


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    • How should cooptation proceed activity

      • Permit each country unit the opportunity

        to develop one transnational system

        • Sense of ownership

      • Downside

        Assume the ability to develop high-quality system is widely distributed

        not always the case


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    • Develop new transnational centers of excellence activity

      • Initial identification & specification of business processes

      • Define the info requirements

      • Perform the business & system analysis

      • Accomplish all design and testing

      • Roll out implementation to other parts of the globe


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    15.1 The growth of international info systems activity

    15.2 Organizing international info systems

    15.3 Managing global systems

    15.4 Technology issues & opportunities for global value chains


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    15.4 activitytechnology issues and opportunities forglobal value chains

    Offshore challenges

    • Managing global teams & global technology services

  • Technology challenges of global systems

    • Standardize a global computing platform

    • Finding specific software applications to be used worldwide

      • Internet reduce network problems

      • Info might not flow seamless

        • Different application software


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    Technology challenges of global systems activity

    • Computing platforms and systems integration

      • New transnational systems

        vs.

      • Existing suite of applications

        • Globally dispersed

          • Different division

          • Different people

          • Different hardware


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    • Connectivity activity

      • Ability to link together the systems and people of a global firm

        • Internet

          • Guarantee of the level of service

          • Security

            • VPN

      • Global intranet

      • Government’s censorship


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    • Software activity

      • How old systems interface with the new?

        • Old systems are kept in local area

        • Costly & messy to build

        • Unique business process and definition of data from different country

      • Human interface & functionality

        • Easily understand & mastered quickly

        • Common language

          • Knowledge workers vs. clerical


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    Managing global software development activity

    • Offshore software outsourcing

      • Cheap wage

      • Lowered cost

        • Communication &

        • Coordination

      • Access to world-class complementary technology

        • 晶圓代工、積體電路設計


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    • Transition management & knowledge transfer cost activity

      • Make sure the vendor thoroughly understand your business

      • Analyzing client’s technology & applications

      • Offshore employee work parallel with in-house employee

      • Additional travel expense


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    • Domestic human resource costs activity

      • Lay off

        • Severance pay 遣散費

        • Retention bonus

          • Keep staff working long enough to share their knowledge with their offshore replacement

        • Adversely impact employee morale & productivity

        • Staff resist to work with the outsourcer


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    • Cost of adjusting to culture difference activity

      • Value & attitude

        • American

          • Speaking up & making suggestions

          • Voice concerns

        • Offshore

          • Keep feeling to themselves

          • Try to please clients

            Lead to more reworks

      • Need more face-to-face interaction

        • Don’t interpret things the same way


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    • Cost of managing an offshore contract activity

      • Invoicing

      • Auditing

      • Additional communication costs

      • Billing correctly

      • Time is properly recorded

      • Data security

      • Intellectual property rights

      • Network security


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