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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

Managing global systems

Think global

Act local

slide2
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
slide3
Challenges
    • Keep track of its own operations
    • Customer packages
slide4
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
slide5
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
slide6
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
slide7
New configuration
    • Global computing infrastructure
      • 3 low-cost, regional global centers
    • Outsourcing software
      • Initially
        • India software company
      • Changed
        • Design: USA
        • Implementation & execution: India
slide8
Benefits
    • Cost
      • Maintain IT infrastructure fallen by 40%
    • Deploy new software
      • In hours (not months)
    • Simplify management communication
slide9
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

15 1 growth of international is
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
slide12
Developing an international info systems architecture
    • Basic info system
      • To coordinate worldwide trade & other activities
slide14
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
slide15
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, …..
slide16
Management issues
    • Business processes
      • How can you reengineer on a global scale
  • Technology platform
    • Choose the right technology to support business processes
slide17
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

slide18
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
slide19
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
slide20
Business challenges of globalization
    • Particularism
      • Making judgment and taking action on the basis of narrow or personal characteristics
        • Religious
        • Nationalistic
        • Ethnic
        • Regionalism
        • Geopolitical
slide21
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
slide22
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

15 2 organizing international is
15.2 organizing international IS
  • Global strategies & Business organization
    • Four main global strategies
        • Domestic exporter
        • Multinational
        • Franchiser
        • transnational
    • Three organizational governance
        • Centralized
        • Decentralized
        • Coordinated
slide24
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
slide25
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
slide26
Forces for
    • Decentralization
      • Protectionism
      • Serve local markets better
    • Centralization
      • Economies of scale
      • Power & authority
slide27
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
slide28
Networked systems
    • Systems development & operations in an integrated & coordinated fashion
slide29
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
slide30
Develop & operate systems units at each level of corporate activity
    • To serve local needs
      • Host country systems
    • To handle telecommunication, systems across national boarder
      • Regional systems
    • To create linkage, coordinate development
      • Transnational systems
slide31
World headquarter
    • Office responsible for development of international systems
slide32
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

15 3 managing global systems
15.3 managing global systems
  • Disorganization on a global scale
    • Multinational companies
      • Dispersed production & marketing
        • Regional & national center
      • Centrally financial control
        • World headquarter
slide34
Challenges
    • 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
slide36
Global systems strategy (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?
slide37
Identify center of excellence
    • Division or unit stands out in the performance
  • Rank-order them
slide38
Global systems strategy (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
slide39
Global systems strategy (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
slide40
Global systems strategy (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
slide41
Global customers & global marketing
    • 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
slide42
The management solution

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
slide43
Select a viable change strategy

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
slide44
Coordinate software releases
    • Ensure that all operating units convert to newer software updates at the same time
slide45
Encouraging local users to support global systems
    • 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

slide46
How should cooptation proceed
    • 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

slide47
Develop new transnational centers of excellence
    • 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
slide48
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

15 4 technology issues and opportunities for global value chains
15.4 technology 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
technology challenges of global systems
Technology challenges of global systems
  • Computing platforms and systems integration
    • New transnational systems

vs.

    • Existing suite of applications
      • Globally dispersed
        • Different division
        • Different people
        • Different hardware
slide51
Data standard & technical standard
    • Ex: Beginning & end of the fiscal year
    • Format of data
      • Dates
    • Communication infrastructure
slide52
Connectivity
    • 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
slide53
Software
    • 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
slide54
What are the most important software application?
    • Transaction
    • Management reporting
    • Supply chain management
    • Enterprise systems
      • Different language, culture heritages, business process
  • EDI
  • Internet-based tools
managing global software development
Managing global software development
  • 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
slide56
Major COST components of offshore software development
    • Contract cost
    • Vendor selection cost
      • Document the requirement
      • Request for proposal
      • Travel expense
      • Negotiate contract
      • Legal fee
      • Project management

take 3 ~ 6 months

slide57
Transition management & knowledge transfer cost
    • Make sure the vendor thoroughly understand your business
    • Analyzing client’s technology & applications
    • Offshore employee work parallel with in-house employee
    • Additional travel expense
slide58
Domestic human resource costs
    • 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
slide59
Cost of improving software development processes
    • In-house process vs. outsourcer’s process
      • Make sure both parties understand thoroughly
      • Write clear specifications
      • Quality assurance testing
        • Test plan
        • Review results
slide60
Cost of adjusting to culture difference
    • 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
slide61
Cost of managing an offshore contract
    • Invoicing
    • Auditing
    • Additional communication costs
    • Billing correctly
    • Time is properly recorded
    • Data security
    • Intellectual property rights
    • Network security